Canada does not foresee stimulus despite tepid growth

Wed Jan 16, 2013 11:11am EST
 

By Louise Egan

OTTAWA (Reuters) - Canada's Conservative government does not expect to launch a new round of fiscal stimulus despite the possibility of weaker-than-expected growth in the first quarter, Finance Minister Jim Flaherty said on Wednesday.

"I don't see the need for it, quite frankly. I think we have adequate economic growth, and I think the prospects for stronger economic growth later in the year and next year are good," Flaherty told a news conference.

Flaherty is preparing the federal budget, due in coming weeks, amid signs economic growth in Canada has slowed. The country has long recovered the jobs and output lost during the 2008-09 recession but exports, heavily reliant on the United States, have yet to return to pre-recession levels.

Flaherty sees growth in 2013 of about 2 percent and noted that the first quarter of the year might be a disappointment.

"Some of the forecasters are making the observation that economic growth in the first quarter of this year may be more modest than some had anticipated but that the second half of the year may well be stronger, particularly in the U.S. economy but in our economy as well," he said.

The modest growth and controlling spending "with some intensity" is sufficient for Ottawa to balance the budget during the course of the current Parliament, which means before the October 2015 general election, he said.

As for the housing market, which policy makers had feared was overheating, Flaherty welcomed data on Tuesday showing housing starts slowed in December for the fourth straight month, but suggested further cooling would be healthy.

"Housing starts are still relatively strong in Canada," he said.

(Additional writing by Randall Palmer; Editing by Grant McCool)

 
Canada's Finance Minister Jim Flaherty speaks during a news conference on Parliament Hill in Ottawa December 14, 2012. REUTERS/Chris Wattie