OTTAWA (Reuters) - The biggest risks to the Canadian economy are the European sovereign debt crisis and the debt and deficits of the United States, Canadian Finance Minister Jim Flaherty said on Monday.
Flaherty made his remarks as he prepared to unveil his new budget.
"The two biggest risks ... (are) the European sovereign debt situation and the danger of contagion into the private sector arising from that, and, secondly, the debt and deficit situation in the United States and some concerns about weakness in the U.S. economy," he told reporters.
Flaherty first presented the budget on March 22 but the Conservative government fell before Parliament could debate the document.
Flaherty, who met private sector economists on May 31, said they felt their overall projections from March were still valid.
"While economists continue to see the risks to the Canadian outlook as balanced, the focus has shifted somewhat ... toward sovereign debt concerns in Europe and away from oil price volatility and the effects of the Japanese earthquake and disaster," he said in a budget document.
"Economists also expressed concern that the growth dynamics in the U.S. could be less strong than previously anticipated, reflecting weaker-than-expected growth in the first quarter of 2011 and ongoing uncertainty over the fiscal situation in that country," Flaherty added.
The United States is by far Canada's largest trading partner and takes around 70 percent of all Canadian exports.
Reporting by David Ljunggren; editing by Rob Wilson