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Economy close to bottom, Flaherty says

The best that can be said about the economy is that it mightnot fall too much farther, Finance Minister Jim Flaherty says.

LONDON–The best that can be said about the economy is that it might
not fall too much farther, Finance Minister Jim Flaherty says.

Quoting
an unnamed colleague's description of the economy, he said, "In
November, the ball rolled off the table and it hasn't hit the floor
yet."

About all that can be said is "we are closer to the bottom" of the economic recession, he told a business audience here.

"Relatively
speaking this is a mild economic recession. We will come out of this
strongly. We are able to withstand this," he said.

Meanwhile,
Prime Minister Stephen Harper, attending a NATO conference in France,
said Canada still faces big job losses but is is also well poised to
emerge quickly and strongly from recession when recovery begins.

"We
all know that we have a massive and growing employment problem," he
told the Business News Network. "We've seen dramatic drops in output,
dramatic rises in unemployment in the last four months... We anticipate
more big job losses."

However, he said the statistics in Canada
were still better than other members of the Group of Seven leading
industrialized nations, with real underlying strengths behind those
that should enable a strong recovery.

Flaherty, who was on the
sidelines of the G20 summit in London, said the world leaders took
important steps to prompt global economic growth and clean up the
banking system.

He declined to predict how far the Canadian economy will fall this year, saying only that 2009 will be a "difficult" time.

He
noted Canada's strong government finances will help the country weather
the downturn and that Canada's banks have not experienced the
devastating meltdown seen among financial institutions in the United
States and Britain.

But more needs to be done outside the United States to restore banks to health, Flaherty said.


"I am encouraged by the actions of the Obama administration. There is
now some meat on the bones of their plan," he said. "I am still
concerned banks in other countries need to be cleansed."

While
the Bank of Canada had softened its tone on following the United States
and Britain in embarking on a policy of asset purchases to reflate the
economy, Flaherty was cautious about the inflation implications.


"The sense among finance ministers in the past 18 months is that we
need to do what we need to do now, and worry about inflation later," he
said. "In Canada we are conscious of that."

He also said when
Canadians compare their current situation to the hardships faced by
forebears who braved disease and death to come to Canada "with nothing"
many years ago, they will see that, relatively, "this is a mild
economic recession."

 
 
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