Economists at the Big Five Canadian banks expect 2011 to be a year of moderate growth, despite widespread uncertainty and numerous risks facing the Canadian and global economies.

Speaking at the Economic Club of Canada’s annual economic outlook event in Toronto on Thursday, chief economists from each of the banks called for decent GDP growth in Canada and around the world this year.

“We’re going to have moderate economic growth, inflation is going to remain under control, interest rates are going to rise, but only gradually, and the Canadian dollar is going to remain relatively strong,” said Craig Alexander, chief economist at TD Bank Financial Group.

Warren Jestin, chief economist at the Bank of Nova Scotia, predicted North American economic growth of 2.5% to 3% in 2011. “We’re looking for modest growth, at best,” he said.

The global economy has reached a tipping point, Jestin said, in which emerging markets have become a more important driver of global growth than developed markets. He expects commodities to benefit this year from ongoing rapid growth in emerging markets such as Brazil, India and China. Jestin predicts that oil will average a price of about US$95 per barrel this year.

Avery Shenfeld, chief economist at CIBC World Markets, is less bullish on commodities, calling for prices to soften in 2011.

“Commodities today may have actually overbought supply and demand fundamentals,” he said. “They’ve been trading like a financial asset.”

This softening in price could lead to a retreat in resource stocks in 2011, according to Shenfeld. Overall, however, he expects equities to produce “decent returns” this year, while it will be a challenging year for fixed income.

The U.S. economy is poised to show improvements in 2011, which will have a positive impact on Canadian GDP, the economists said. Sherry Cooper, chief economist at BMO Capital Markets, said she expects to see the U.S. economy grow by at least 3%.

“I do believe that the U.S. economy will grow at a more rapid pace this year than last,” she said. “If we revise these numbers, it will be upward rather than downward.

U.S. consumers will help to support the economy as the unemployment rate falls from 9.7% to about 9%, and as personal income growth hits its highest level since 2007, Cooper predicted.

She also expects corporate investment to rise, while fiscal support will come from tax cuts. Cooper does not expect the Federal Reserve to raise interest rates until well into 2012.

The economists warned that there is no shortage of risks threatening to hamper economic performance this year. Alexander pointed to ongoing sovereign debt concerns in Europe, high unemployment levels in the U.S., rising household debt levels in Canada, and a housing market that isn’t showing much growth.

“When you think about it, there’s an enormous number of risks out there that are weighing on confidence,” said Alexander.

He expects these risks to result in volatility in the year ahead.