Once-confident Canada now awash in economic gloom

Tue Dec 16, 2008 2:54pm EST
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By David Ljunggren

OTTAWA (Reuters) - A little over two months ago, Prime Minister Stephen Harper assured Canadians that the economy was well placed to deal with the global recession and dismissed talk of budget deficits.

That relatively upbeat era is now over, washed away by an ever-widening river of gloom, stark language, pleas for help and relentlessly negative data.

"The truth is, I've never seen such uncertainty in terms of looking forward ... I'm very worried about the Canadian economy," Harper told CTV television on Monday. "Obviously, we're going to have to run a deficit."

His comments further eroded dwindling stocks of optimism in a country were you cannot escape predictions of doom.

Statistics Canada releases a steady stream of downbeat reports and barely a week goes by without an industry group forecasting calamity unless governments step in to help.

Ontario -- Canada's most powerful province -- released a report on Tuesday saying it would lose 517,000 jobs within five years if the Big Three auto makers went bust.

"The demise of auto in Canada is the economic equivalent of a nuclear freeze, with catastrophic effects that would knock us into a deep recession ... Transformation of the auto industry -- absolutely. Armageddon -- no," Economic Development Minister Michael Bryant told reporters in Toronto.

At the same time, the Forest Products Association of Canada was demanding Ottawa take five urgent steps to help.   Continued...

<p>Prime Minister Stephen Harper takes part in a caucus meeting on Parliament Hill in Ottawa December 10, 2008. REUTERS/Chris Wattie</p>