Canada PM Harper says recession not truly over

Thu Jan 7, 2010 6:21pm EST
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OTTAWA (Reuters) - Canadian Prime Minister Stephen Harper said on Thursday the country's recession is not yet over, noting that the return to economic growth in a technical sense is not the only factor to be considered.

When asked in an interview with French-language broadcaster Radio-Canada if he believed the recession was over, Harper said: "I say no, and I know my friends, other economists, say the recession is over."

"That may be true in a technical sense, growth has recommenced, but in reality we've seen ... the stabilization of the world economy," he said in the interview shown to a group of journalists in Ottawa and scheduled to be broadcast in full on Sunday.

"We hope and we're optimistic that we are going to get a boost during this year, but our position is that we must continue with the stimulus measures this year but start planning the exit strategies," he said.

Harper also said he saw no need for major spending cuts in order to balance the federal budget in years to come, as long as Ottawa used fiscal discipline.

After three quarters of economic contraction, Canada posted weaker than expected growth of 0.4 percent in the third quarter of 2009 on an annualized basis. The most recent data on monthly gross domestic product also showed a second straight expansion in October.

A Reuters poll of global economists last year forecast the Canadian economy would grow by 2.5 percent in 2010.

But the chief economists at Canada's largest banks warned this week that the recovery is fragile and could falter if governments and central bankers around the world don't strike the right balance in withdrawing extraordinary support provided in the financial crisis. They also said the export-oriented Canadian economy is vulnerable to any downturn beyond its borders.

In another interview with CBC Television on Tuesday, Harper said he could declare victory over the recession only when the jobless rate came down.   Continued...

<p>Canada's Prime Minister Stephen Harper speaks during Question Period in the House of Commons on Parliament Hill in Ottawa December 9, 2009. REUTERS/Chris Wattie</p>