Canadian economists see "terrible" start to '09

Wed Jan 7, 2009 3:51pm EST
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By Frank Pingue

TORONTO (Reuters) - The Canadian economy could see little or no growth in 2009 given the global plunge in commodity prices and weak U.S. demand for its exports, top economists from the country's largest banks said on Wednesday.

They predicted Canadian interest rates, already at a 50-year low, could be slashed significantly in the coming months as the economy continues to shed thousands of jobs and unemployment rises.

"The first half of 2009 looks pretty terrible for Canada," Don Drummond, chief economist at Toronto-Dominion Bank, said at an Economic Club of Canada event in Toronto.

Drummond's comments came ahead of key data due on Friday that is expected to show the Canadian economy shed 22,000 jobs in December. That would follow a loss of 70,600 jobs in November.

Canada sends about 75 percent of its exports to the United States, leaving it extremely vulnerable to the growing economic crisis there.

"There's a lot of bad news to get through over the next six months," said Avery Shenfeld, senior economist at CIBC World Markets.

Data released late in December showed the economy shrank in October, paving the way for a recession that has now been widely predicted by economists and government officials.

Craig Wright, chief economist at Royal Bank of Canada, said the Canadian economy will see no growth in 2009.   Continued...