Canadian Economy likely to Overcome U.S. Sub-Prime Crisis



    TORONTO, Oct. 4 /CNW Telbec/ - Canada's economy should emerge without
serious damage from the U.S. sub-prime debacle-if the U.S. economy can stay
out of recession-according to a Conference Board of Canada analysis released
at its Business Outlook briefing today.
    "The combination of the strong Canadian dollar and slowing U.S. growth
will decrease exports in sectors such as wood products and automobiles, but
the Canadian domestic economy remains robust and should offset declines in
exports," said Kip Beckman, Principal Research Associate and author of The
U.S. Housing Market Meltdown: Implications for Canada. "In addition, most
Canadian banks have limited direct exposure to the sub-prime mortgage market,
and should be able to weather the storm.
    The ongoing turmoil in U.S. housing markets, a result of the collapse in
sub-prime mortgage markets, is expected to continue until at least the autumn
of 2008. The negative effects on U.S. consumer spending-lower employment in
housing-related sectors, a negative wealth effect attributable to falling home
prices, and weaker consumer confidence-will drag down overall U.S. economic
growth.
    Still, the Conference Board forecasts that the U.S. economy will avoid a
recession, mainly due to strong exports and business investment. However,
further negative developments-such as a major U.S. bank running into financial
trouble-could easily undermine American consumer confidence and economic
growth. In that scenario, Canada's economy would grow at a slower pace than
the 2.8 per cent currently forecast for 2008.

    The analysis is being presented as the keynote address at the Conference
Board's 2007 Business Outlook Briefing, today at 12:45 p.m. at The Fairmont
Royal York in Toronto.




For further information:

For further information: Brent Dowdall, Media Relations, (613) 526-3090
ext. 448, corpcomm@conferenceboard.ca


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