‘No stimulus package can stop recession in US, Canada’January 15th, 2009 - 2:19 pm ICT by IANS
Toronto, Jan 15 (IANS) No fiscal stimulus by governments in the US and Canada will stop their economies from recession in 2009, said an independent Canadian think- tank Wednesday.Proposed tax cuts and government spending on infrastructure are no recipe for stopping contraction of the two economies, the Conference Board of Canada said in its two-report.
In ‘Canadian Outlook: Winter 2009,’ the board said the US-led global recession will cause the Canadian economy to contract in the first two quarters of the year.
This will cause the Canadian GDP to shrink by 0.5 percent in 2009, the board said in a release in Ottawa.
As per this dire forecast, the Canadian economy will shrink for the first time since 1991, pushing the jobless rate above eight percent for the first time in 14 years.
“The deepening US recession continues to hurt Canada’s trade sector. The new and perhaps more significant factor dragging the Canadian economy into recession is the impact that much lower commodity prices are having on real income,” board’s national forecast director Pedro Antunes said.
“Lower resource prices, combined with waning consumer and investor confidence and the bleak US outlook, will bring a recession to Canada in 2009,” he said.
The board said Canada’s federal and provincial governments will sink so deep into fiscal deficit that they will find it difficult to balance their budgets till 2013.
In ‘US Outlook: Winter 2009′, the board said the American economy this year faces its greatest contraction since the 1930s.
Despite the proposed massive stimulus package, it said the America’s GDP will shrink by 1.7 per this year.
“Almost every region, industry, occupation and demographic group in the United States is being affected by the current downturn,” said Kip Beckman, board’s principal research associate.
“American household spending, which has been a pillar of global demand in recent years, is forecast to drop by 4 per cent in 2009,” he said.
However, the report saw a rebound in the second half of 2010 if Barack Obama’s proposed stimulus package is implemented.
The board forecast the US GDP could grow by 2.2 percent in 2010. This could lead the Canadian GDP to grow by 3.6 percent next year, the board said.