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RE: IMF cuts Canada's outlook

Postby Libertyrides » Thu Feb 05, 2009 10:07:39 AM

Let's find some news that's uplifting.. I heard that hot air ballooon rides were on the upswing. :)

I'm so tired of the doom and gloom... especially in the "prediction" department, you know? It's one thing for the news reports to share information/facts, but quite another to be fear-mongering and getting all the chickens in the yard feeling panicked and immobilized with anxiety.
"I think the next best thing to solving a problem is finding some humor in it" ~ Frank A. Clark
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RE: IMF cuts Canada's outlook

Postby average_joe » Thu Feb 05, 2009 10:02:25 AM

I don't make the news I just report them lol.
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RE: IMF cuts Canada's outlook

Postby Libertyrides » Thu Feb 05, 2009 10:01:11 AM

Well, gee.. if the sky is falling I'd better learn to roof!! :)

G'morning, AJ and Monty.
"I think the next best thing to solving a problem is finding some humor in it" ~ Frank A. Clark
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IMF cuts Canada's outlook

Postby average_joe » Thu Feb 05, 2009 09:56:12 AM

International body says recession will be deeper than first expected.

The International Monetary Fund is warning that the recession in Canada this year will be much deeper than this week's federal budget is projecting and next year's recovery a lot weaker than forecast by either the federal government or Bank of Canada.

The IMF yesterday cut its projections for global growth to just 0.5 per cent, the weakest performance since the end of the Second World War. It also projected a three per cent recovery next year, which was also weaker than its previous forecast in November.

"A sustained economic recovery will not be possible until the financial sector's functionality is restored and credit markets are unclogged," the global lender of last resort warned in releasing its forecast, in which it also upped its projection for global banking losses due to toxic U.S. assets to $2.2 trillion US from the $1.4 trillion US anticipated last fall.

"Monetary and fiscal policies need to become even more supportive of aggregate demand and sustain this stance over the foreseeable future, while developing strategies to ensure long-term fiscal sustainability," it said.

"Moreover, international co-operation will be critical in designing and implementing these policies."

It now sees the Canadian economy contracting by 1.2 per cent this year, which is weaker than the 0.8 per cent shrinkage projected in the federal budget, and then posting only a marginal 1.6 per cent recovery next year, which is also less than the 2.4 per cent projected in the budget and the 3.8 per cent forecast last week by the Bank of Canada.

Finance Minister Jim Flaherty, in presenting his budget Tuesday, suggested that all economic projections should be taken with a grain of salt.

"Listen, we're in unchartered waters," he noted. "The economists have been wrong in their predictions over the course of many months."

The IMF's forecast for Canada this year is also down from its previous projection only two months ago of 0.3 per cent growth.

More interesting, however, is the weakness of the IMF forecast for Canada's economy next year, said TD economist Eric Lascelles.

"This is the weakest figure we have seen, and it appears that the IMF has revised the Canadian outlook downward by the most of any 'advanced economy,'" he observed. "The divergence between the IMF and the Bank of Canada outlooks are extreme, and we are more sympathetic to the IMF than the Bank of Canada outlook at this juncture, given all of the risks of a sustained slowdown."

The U.S. economy, meanwhile, will contract by an even greater 1.6 per cent this year, according to the new IMF forecast and then post a 1.6 per cent recovery next year, which is a somewhat stronger rebound than it had been forecasting.

"This last fact may speak to the large amount of fiscal stimulus being implemented in the U.S.," Lascelles said.

The forecast was issued as the new U.S. administration is trying to push another stimulus package worth more than $800 billion US through Congress to bolster that struggling economy and as the Federal Reserve, having already cut its key rate to near zero, left the rate unchanged yesterday, while indicating it was instead looking at other ways to ease the credit crunch there.

Among developed countries, Britain, Japan, and Germany are now expected to put in the weakest performances this year, while Italy and Spain are expected to have the worst performances next year, he also noted.

The Russian outlook, however, was revised down the most -- by 4.2 percentage points to a contraction of 0.7 per cent this year and posting 1.3 per cent growth in 2010. China is expected to grow by 6.7 per cent in 2009 and eight per cent in 2010.

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