The worst is over for Canada's recession-hit economy, and output will start to grow again in the second half of this year, Royal Bank of Canada said.
In an economic report, Canada's largest bank said it still expected gross domestic product to decline this quarter. But the annualized fall in second-quarter output will be just 3.2%, down from the first quarter's steep 5.4% contraction.
“Although Canada's economy slumped in early 2009 and will likely remain in recession this second quarter, we believe it is ripe to enter its recovery phase later this year,” said Craig Wright, senior vice-president and chief economist at the bank.
“Improving global growth prospects, alongside extraordinarily low interest rates and government stimulus, are expected to allow Canada to return to positive growth in 2009, with a moderate recovery in 2010.”
Government officials have also said they expect Canada's economy to start growing again in the second half of the year after a downturn that also brought Canada its first trade deficits in decades.
The central bank has cut interest rates almost to zero, and the government is pumping billions of dollars into the economy to trigger a revival.
Royal Bank forecast that gross domestic product will grow by 0.8% in the third quarter, and 2.4% in the final quarter of the year. (Reuters)