Flaherty says world economy still growing slowly

Fri Aug 19, 2011 9:59am EDT
 
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By Randall Palmer and David Ljunggren

OTTAWA (Reuters) - The world economy is still growing slowly, although Europe and the United States need "difficult and bold action" to rein in deficits, Finance Minister Jim Flaherty said on Friday.

In testimony prepared for a parliamentary committee, Flaherty admitted that Canada's second-quarter growth was also set to come in below expectations.

He criticized the concept of extra spending as "exactly what we should not do" but stressed that Canada would act pragmatically if the world economy deteriorated dramatically.

"As we have emphasized repeatedly for some time now, we are in a period where the global economic recovery - especially in the U.S. and Europe - is fragile and growth will be modest," he said.

"However, it is important to note that the global economy is in fact largely growing - albeit slowly."

It is rare for parliamentary committees to hear testimony of this nature during the summer break.

Canada's opposition New Democrats had called for the hearings as financial markets swooned during what is traditionally a quiet summer season, partly on fears that the world was heading back into recession.

"You cannot be rigid and inflexible," NDP finance critic Peggy Nash told Flaherty.   Continued...

 
<p>Finance Minister Jim Flaherty prepares to testify before the House of Commons finance committee on Parliament Hill in Ottawa August 19, 2011. REUTERS/Chris Wattie</p>