Flaherty Warns of Bumps Ahead for Canadian Economy

(CEP News)

Canadian Finance Minister Jim Flaherty says Canada is well positioned to weather the current global economic downturn, but warns of more economic bumps on the road to recovery, “particularly in the auto sector.”

“We will have modest economic growth” in the remainder of this year, Flaherty told journalists in Toronto, but Canadians should anticipate more slowness in the economy, especially in Ontario’s beleaguered manufacturing sector.

Flaherty was reacting to the latest release of Canadian GDP numbers, which were lower than expected, but showed that Canada avoided the technical definition of a recession by posting a 0.3% annualized growth in Gross Domestic Product in the second quarter of 2008. Analysts had been looking for an increase of 0.6%.

Statistics Canada reported Friday that the economy edged up in the second quarter after slipping a revised 0.2% (-0.8% annualized) in the first three months of the year.

The second quarter’s growth came even as domestic demand grew 0.5% and foreign demand for Canadian goods and services registered a fourth consecutive decline.

Flaherty said although Canadian GDP figures released Friday fell short of economists’ expectations, Canada still boasts stable core inflation, a jobless rate that is at a 33-year low, a $1.7-billion dollar surplus as of June, and “a housing market [that] is sound.” Read the complete article.