OTTAWA – Several of the world’s leading economies appear poised to emerge from the most severe global downturn in decades but Canada is not yet among them, says a respected international economic forum.
The Organization for Economic Co-Operation and Development says its index of composite leading indicators for March shows China is already exhibiting signs of a pause in the severe economic slowdown.
The United Kingdom, Italy and France are also showing tentative signs of having hit the bottom of their slide.
The OECD places Canada, along with the United States and most other large economies, as still in the grip of a “strong slowdown,” although it said the pace of deterioration is slowing.
The monthly index for Canada was about half a point lower in March and 10.2 points off where it was last year, below the average for OECD economies.
The OECD report released Monday comes amid other signs of so-called “green shoots” that are giving economists, investors and governments hope that the recession that began in October in Canada and earlier in many other economies is approaching a bottom and could rebound in late 2009.
While Prime Minister Stephen Harper has said he expects Canada to emerge from recession before many other economies, the early evidence doesn’t appear to back up such optimism.
CIBC chief economist Avery Shenfeld said the pace of economic deterioration appears to be slowing in Canada, after suffering the worst quarterly contraction since the Great Depression, but North America will likely lag behind many others in the turnaround.
“At best we’ve seen early signs Canada and the U.S. may be entering a period of more moderate decline rather than growth, but in East Asia we’re seeing convincing signs that they are past the trough,” said Shenfeld.
“They are already rebounding in China, Korea and perhaps Japan as well from deep troughs in the case of Japan and Korea.”
The OECD found China’s composite of leading indicators rose by almost a point in March, the second consecutive month of growth. The rebound was less pronounced in the U.K., France and Italy.
“Weak though these signals are, they are present in the majority of the (composite leading indicators) component series for these countries,” the organization said in a news release.
Canada saw its first positive jobs report in six months in April, with employment actually registering a modest 36,000 jobs gain, although all came in the self-employment category.
Despite a correction Monday, North American stock markets have also rebounded somewhat from last fall’s collapse, with the Toronto Stock Exchange topping the 10,000-point level for the first time in six months.
Shenfeld said the renewed optimism is an indication that investors are now discounting their worst fears about how far the economy can fall.
“The base case still involves North America recovering late this year and into 2010, but there aren’t as many investors worried about it… becoming a depression,” he said.
The Bank of Canada earlier this month forecast Canada’s economy will stop falling in the fourth quarter of this year and post a 2.5 per cent rebound in 2010.
