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Bank of Canada Governor Mark Carney Warns on Growth

January 22, 2010

Bank of Canada Governor, Mark Carney, warned yesterday that the country has to boost its troubling productivity record or face years of sputtering economic growth that would be hard-pressed to surpass the 2% mark.

For now, the central bank reiterated an economic recovery is under way, boosted by improved global prospects and government stimulus, with growth to peak in the second quarter of this year, at a 4.3% annualized pace, according to its latest forecast introduced yesterday.  Business investment and the pace of export growth are set to ramp up through 2010, while the red-hot activity in Canadian real estate will peter out once pent-up demand subsides and affordability declines, it indicated.

“U.S. exports are expected to grow substantially, supported by a weak U.S. dollar and a faster-than-anticipated recovery in overseas economies,” the Bank of Canada said in its forecast. “Higher productivity growth and lower unit labour costs have also made U.S. goods more competitive.”

Further, external demand will remain at “absolute low” levels in the United States, with Mr. Carney citing U.S. housing starts. They should climb to 700,000 units this year from 550,000 last year – but well below the 2.1 million peak hit prior to the financial crisis.

Read the entire article “Carney warns on growth” from the Financial Post (January 21, 2010)

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