Generous government spending to bolster Canadian economic growth in 2010

OTTAWA, Oct. 16 /CNW Telbec/ - Ongoing federal and provincial fiscal stimulus will help offset weak growth in private sector investment next year, leading to economic growth of 2.9 per cent in 2010, according to the Conference Board's Canadian Outlook-Autumn 2009.

"The recession had a strong and painful effect on Canada's economy, but the darkest days appear to be in the past," said Pedro Antunes, Director, National and Provincial Forecast. "Private spending is expected to remain sluggish through next year, so generous government spending will help bridge the gap in the short term. While the timing and size of the stimulus is an appropriate response to the recession, the debt now being piled up will constrain the policy choices of governments in the future."

Canada's real gross domestic product is expected to decline by 2.1 per cent in 2009. If, as the Conference Board assumes, growth resumed in the third quarter this year, the recession would have lasted three quarters. This would make the 2008-09 recession similar to the 1990-91 downturn and less severe than the 1981-82 recession.

Private sector capital investment, which is expected to fall by a whopping 13.7 per cent in 2009, is forecast to grow by less than one per cent next year. In contrast, double-digit growth in public infrastructure spending is expected in both 2009 and 2010.

Infrastructure spending levels are forecast to surpass $50 billion in 2009 and peak at almost $60 billion in 2010. The downside to this massive spending is the sharp rise in federal and provincial deficits-when both levels of government are combined, deficits are estimated to be $75 billion in 2009 and almost $83 billion in 2010.

SOURCE Conference Board of Canada

For further information: For further information: Brent Dowdall, Media Relations, Tel.: (613) 526-3090 ext. 448, E-mail:

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