Not even massive infusions of government spending and tax cuts will keep Canada and the United States out of recession this year, says the Conference Board of Canada.
The Ottawa-based think-tank says Canada’s economy tumbled into recession at the end of 2008 and will continue to shrink through the first half of this year — for three negative quarters of growth.
The slide will end in the final two quarters of 2009 as the U.S. economy rebounds, but not enough to avoid an annual contraction of 0.5 per cent in the Canadian economy, the first since 1991. True recovery won’t occur until next year, the board said.
Meanwhile, 175,000 Canadians will likely lose their jobs this year as layoffs mount and hiring freezes, the meltdown in commodity prices and plunging home values eat away at Canadians’ incomes. In addition, business profits and investment will crash, and both federal and provincial budgets will fall into sizable deficits, the economic research group said.
The Conference Board had been among the most optimistic forecasting groups and had projected a 1.5 per cent growth rate for Canada this year as recently as its autumn outlook.