Canada ups 2010 growth view, says budget on track

Mon Apr 26, 2010 2:48pm EDT
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TORONTO (Reuters) - The Canadian government raised its 2010 economic growth outlook on Monday, based on forecasts from private sector economists, bringing its view closer in line to that of the Bank of Canada.

The average of 15 forecasts is for real growth in gross domestic product of 3.1 percent in 2010, up from 2.6 percent in the survey taken in December and used as the basis of the federal budget released in March.

Growth for 2011 is seen at 3.1 percent, down from 3.2 percent in the December survey.

"Overall, the March survey results suggest that the near-term outlook has improved since the December survey was conducted," the Department of Finance said.

The government has used the average of private sector forecasts as the base for its fiscal planning since 1994, a method that aims to ensure independence in its estimates.

The Bank of Canada last week estimated 3.7 percent growth this year, slowing to 3.1 percent in 2011, after economic activity rebounded faster than expected in the fourth quarter of last year and early this year.

Nominal GDP, the broadest measure of the tax base, is seen growing 6 percent this year, up from 4.9 percent previously, and by 5.2 percent in 2011.

The poll suggests the unemployment rate will ease to 8.1 percent from the 8.5 percent seen in December, and to 7.7 percent next year.

The outlook is good news for the Conservative government, which is under pressure to show how it plans to balance the federal budget after it fell into deficit during the recession for the first time in a decade.   Continued...