October 29, 2010 / 1:14 PM / in 7 years

Flaherty says U.S. housing a threat

WHITBY, Ontario (Reuters) - The faltering U.S. housing market is a potential threat to a Canadian economy that is likely to produce only moderate growth, Canadian Finance Minister Jim Flaherty said on Friday.

“The American housing sector remains a major concern,” he told reporters at an event in Whitby, Ontario.

The IMF warned on Thursday that risks to Canada’s economic outlook have increased and include the impact of housing market weakness in the United States, Canada’s largest trading partner.

Even so, Canada’s economy resumed growing in August after a brief downturn in July, bolstered by wholesale trade, manufacturing and oil and gas extraction, data showed on Friday.

Gross domestic product climbed 0.3 percent, as expected, compared with a 0.1 percent contraction in July.

The finance minister said it was good to see growth resume, but that Canadians should be realistic in their economic expectations.

“What we are seeing is modest, moderate growth. We are not in the boom times that led up to the recession,” he said.

Flaherty, who last week attended a meeting of Group of 20 finance ministers in South Korea, said the “fervent desire is to avoid tit-for-tat actions” after some countries intervened in markets to influence the level of their currencies.

The finance minister also said he was optimistic G20 leaders would adopt new international rules on bank capital standards, known as Basel III, without significant change at their upcoming meeting in South Korea

“Our leaders told us to get that job done when they met in Toronto in June and we’re almost there. So we expect when the meeting takes place ... that that will be accomplished.”

Writing by Jeffrey Hodgson; editing by Peter Galloway

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