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Canadian finance minister sees signs of recovery

Canadian Finance Minister Jim Flaherty sounded an upbeat note on the North American and global economies, saying he detected small signs of encouragement amid all the uncertainty.

Flaherty also said Canadian bond and capital markets were improving and that the United States would make significant progress in stabilizing its banking system in May.

“There are some good signs. We see some stability in the economic performance, some resilience in China, GDP anticipated growth in India of 6% ... so we are seeing some strength in some of the large emerging economies, but there is a significant degree of uncertainty that we face,” he told reporters.

Flaherty maintained his assumption of a nominal GDP decline in Canada of 2.7% this year, made in the January budget, saying that fiscal stimulus was now entering the economy.

The budget also includes a private sector forecast of 0.8% decline in real GDP this year.

“We've made the best assumptions we can ... we're seeing some small encouraging signs in the Canadian economy and in the United States as well,” he said.

“The Americans are proceeding with their stress testing of their banking system. That's going to be a major step forward during the month of May. So these are encouraging signs.”

Flaherty's remarks come ahead of a meetings by G7 and G20 finance ministers and central bank chiefs in Washington on Friday and Saturday.

They also precede a much-anticipated Bank of Canada report to be released on Thursday, in which the central bank will outline its options for spurring more lending by means other than interest rate cuts. (Reuters)