TORONTO (Reuters) - Strong domestic demand and high commodity prices will help the Canadian economy grow in 2008, even as the U.S. economy slows, the Conference Board of Canada said in its winter outlook on Monday.
Real gross domestic product is seen growing by 2.8 percent this year, providing the economic situation in the United States doesn’t become too dire, the board said.
That’s a more optimistic outlook than the one Bank of Canada Governor David Dodge gave last week, when he said the U.S. economic slowdown could hurt Canada’s economic performance more that previously thought.
The central bank said in October in its Monetary Policy Report it sees GDP growth easing to 2.3 percent in 2008 from a projected 2.6 percent in 2007.
The bank’s next MPR will be released on January 24.
The Conference Board said the United States should skirt a recession mainly due to continued growth in consumer and investment spending, which has held up well in spite of the turmoil in U.S. housing and credit markets.
“As long as the United States averts a recession, Canada’s domestic economy will remain largely impervious to woes afflicting our largest trading partner,” said Pedro Antunes, the board’s director of national and provincial forecasts.
The board forecast that domestic demand, which averaged 4.3 percent growth annually for four years, to expand by more than 3 percent in each of the next two years.
The board said many of the positive conditions that have stimulated Canada’s economy remain in place, such as strong job growth and wage gains.
Recent tax reductions should help maintain the momentum in domestic spending, the board said.
The outlook for corporate profits is positive for 2008, thanks largely to high resource prices.
The board also noted that strong profitability, combined with announced reductions in corporate taxes, appears to have reignited private investment by firms.
Reporting by John McCrank; editing by Rob Wilson