Economists predict modest recovery in 2010
In a session best characterized as sobering, keynote speakers at the annual Vancouver Board of Trade Economic Outlook talked about economic activity at home and abroad. Economists Dr. Sherry Cooper, Helmut Pastrick, and Cameron Muir agreed that a recession will continue in Canada in 2009, but will not last as long nor be as serious as the U.S. economic downturn.
As we move into 2010, we’ll see a pick-up in economic activity,. said Dr. Sherry Cooper, chief economist, BMO Capital Markets. .We’ll likely see a $16 billion stimulus package in Canada, or roughly one per cent of the economy...We’ll see lower growth in the future, and lower rates of re-turn. This will become the new norm..A concern, as she sees it, is not of rapid inflation in these times, but of deflation taking hold across our economy as consumer and business spending dries up. She expects inflation, as measured by the Consumer Price Index, will be negative in Canada for 2009, but will trend upward again in 2010.
Cooper said U.S. house prices have fallen about 24 per cent since their peak, and that inventory of unsold homes is at record high levels. She predicts that U.S. housing prices will continue to decline by a further 10 to 15 per cent before hitting bottom..The rebound in the U.S. housing market will be very slow. And banks will be much more hesitant in their mortgage lending..In Canada, she said the housing market has slowed, but we aren’t going to see the collapses experienced in the U.S. Our banks more stringent lending practices pre-vented Canada from having the same sub-prime mortgage issues that caused such a dramatic decline in the U.S. housing market.
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