2010 Bennett Jones Business Forecast

Short Term Economic Outlook Improves

In the first half of 2010, Canadian economic growth is likely to rebound to about 3½ percent (at annual rates) driven by stimulative fiscal and monetary policy, inventory rebuilding, stabilization of the housing sector, and relatively robust growth in emerging markets. The unemployment rate is likely to peak at about nine percent. The policy interest rate should remain close to zero and credit spreads will narrow a little bit more.

The remainder of 2010 is highly contingent on governments' fiscal exit strategy. Domestic demand (consumption and business investment) should grow at three percent or more (at annual rates), but this will be off set somewhat by the slowing growth of government expenditures and a small drag from net exports. The policy rate of the Bank of Canada will begin to