The Canadian economy will continue to grow in 2010, but will be hampered by lagging exports, a high dollar, and continuing high unemployment, the Canadian Chamber of Commerce said Monday.
A report from the group, released Monday, predicts modest economic growth of 2.6% in 2010, compared to a 2.5% shrinking of the Canadian economy in 2009. Increases in global trade volume, share prices, and consumer and business confidence are expected to drive economic growth worldwide.
"The post-recession environment will look very different from what existed before the crisis. The 'new normal' demands that even the smallest of businesses find ways to improve their competitiveness," said chief executive Perrin Beatty.
Canadian growth remains slow, largely because of low demand for Canadian exports in the United States, according to the report. Household spending in the U.S. is expected to remain low, and the high value of the Canadian dollar is also making exports more expensive for American customers.
A high unemployment rate is also expected to slow economic recovery. The report predicts the unemployment rate will peak in early 2010 at about 8.8% as more people re-enter the labour force and resume job searches. The unemployment rate is expected to drop to 8.1% in 2011, but it will remain higher than pre-recession levels, such as in 2007, when rates stood at 6%.
Inflation is also expected to remain low in 2010. The Consumer Price Index is expected to rise about 1.6%, followed by 2.0% in 2011.
While the economic outlook has improved, economic growth is still at risk and the government must continue stimulus measures, said Beatty.
"Premature withdrawal of stimulus measures would stall recovery, endanger confidence, and put jobs at risk," said Beatty.
