Canada's Flaherty upholds economic growth outlook

Wed May 28, 2008 10:03pm EDT
 
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OTTAWA (Reuters) - Canadian Finance Minister Jim Flaherty maintained on Wednesday his forecast for economic growth of 1.7 percent in 2008 but warned the economy faces serious challenges amid the U.S. slowdown.

"We're comfortable with the forecasts that we've been using. We're comfortable with the fact that we're on track in this fiscal year," he said in testimony to Parliament.

In the February 26 budget, the Conservative government downgraded its 2008 growth forecast to 1.7 percent from a forecast last October of 2.4 percent.

It expects to balance the budget in 2008-09 for a 12th straight year with an estimated surplus of C$2.3 billion.

Flaherty cautioned, however, that Canada's trade-reliant economy is under pressure from developments abroad and from a strong currency.

The United States consumes about three quarters of Canada's exports.

"The slowdown of the U.S. economy is impacting our exports; we are experiencing volatility in global financial markets; a strong Canadian dollar has left several sectors struggling, including manufacturing, processing, forestry and auto sectors," he said.

"These are the challenges that lie ahead, the realities that we cannot ignore."

(Reporting by Louise Egan; Editing by Leslie Adler)