OTTAWA, Ont. — Federal Finance Minister Paul Martin is being advised that Canada is likely to escape a recession and economic growth should rebound later in the year.
“The good news is that there is only about a 15 per cent probability of recession in Canada this year,” Dale Orr, chief economist of WEFA Canada, tells national media.
Blaming the downturn in the U.S., growth is only forecast at 2.5 per cent for 2001, and that’s considerably down from the 4.7 per cent growth enjoyed last year, Orr adds. But the Canadian economy should enjoy a rebound toward the end of the year, fueled by tax cuts, lower interest rates and a revival in U.S. growth.
“By the final quarter of this year, as well as throughout next year, the economy is expected to be growing close to a 3 per cent pace,” concludes Orr. The forecast complements news from the Canadian construction industry that building permits issued in January hit a record $3.8-billion for one month.
The number of permits issued for residential and non-residential buildings rose by more than 20 per cent compared to December, according to figures from Statistics Canada.
According to the Canadian Construction Association (CCA) it expects to see 4.2 per cent growth in the construction industry this year, which is down from a 10 per cent rise last year. While there is certainly a slowing effect taking place, a spokesman for the CCA says that no one is going to complain about 4.2 per cent growth.
The data from Orr are the first of a new set of projections from an elite group of forecasters and economists that Martin has relied on for fiscal planning. The group is composed of the five major banks and four private-sector forecasting firms — WEFA, the Conference Board of Canada, the University of Toronto and Standard and Poor’s DRI Canada. Martin indicates he is waiting for new data before he provides Parliament with a fiscal update, now expected in April.