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OTTAWA (Reuters) - Canada's economy will stay in a recession for three quarters and contract 0.5 percent annually in 2009 with the jobless rate peaking at 8.1 percent, the Conference Board of Canada forecast in a report on Wednesday.
Canadian export volumes have been losing steam since late 2007 as the global economy slowed. But until recently the Canadian economy was shielded from the slowdown by high commodity prices.
"What is new -- and perhaps more devastating -- is the impact that lower commodity prices will have on real income in Canada, especially when combined with the effect of waning consumer and investor confidence," the research group said in its outlook for the Canadian economy.
Gross domestic product is seen shrinking 0.9 percent in the fourth quarter of 2008, followed by contractions of 0.5 percent and 0.1 percent in the first and second quarters of this year.
The Board sees U.S. export markets hitting bottom this year and before starting to recover in the second half, with the Canadian economy posting a robust 3.6 percent growth in 2010.
Canada sends three-quarters of its exports to the United States and weak demand there, combined with falling oil prices, dragged down exports by 7 percent in November -- the most recent month for which data is available. Canada's trade surplus fell to its lowest in 11 years as a result.
Reporting by Louise Egan, editing by Jeffrey Hodgson