(November 9 – 14:50 ET) –
National Bank projects continued
strong economic growth on the eve
of the new millennium, with
optimism generally widespread
internationally contrasting with
fears last year of a financial
crisis.
The Asian countries all
recovered much more quickly than
projected,while Europe is coming
out of a perpetual period of gloom
and the United States is
continuing to post robust
inflationless growth, states a
National Bank prepared statement.
Rising commodity prices as well
as strong and sustained demand from
the United States, have boosted
business confidence and corporate
earnings, says the bank. These
factors and the low interest rate
environment, which is projected
to continue for the next two years,
will push spending on machinery
and equipment up by 10% and on
residential construction by 5% in
2000 and 2001.
In addition, encouraged by an
increasingly vibrant job market,
consumers are contributing
substantially to economic growth.
Given these conditions, the
National Bank projects GDP growth
of 3.3% in Canada in 2000 and of
2.9% in 2001. Canadian monetary
policy succeeded in promoting
economic growth, except last fall
when the Bank of Canada hiked rates
significantly to stop the dollar’s
slide.
Up to now, the Bank of Canada
has been able to steer a relatively
independent course from the
United States, but it will have to
go along with the perceived
tightening south of the border and
elsewhere in the world, if it is
to prevent the Canadian dollar
from losing ground again, states
the bank press release.
The National Bank projects the
prime rate to increase slightly,
about one quarter of a percentage
point, to 6.75% in 2000, and to
likely drop to 6.0% in 2001,
matching the minor economic
slowdown projected.
-IE Staff
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