(February 13 – 17:10 ET) – /CNW/ – While the Canadian economy is not immune to developments in the United States, Canada is well positioned to weather the U.S. storm, according to the Economics Department of Bank of Montreal.

“A recession in Canada is unlikely,” said Rick Egelton, deputy chief economist of Bank of Montreal “Significant income tax cuts, modest declines in interest rates, a better performing equity market and a weak currency will allow the Canadian economy to outperform the U.S. economy in 2001. Growth in Canada is expected to reach 2.75% this year and 3.6% in 2002.”

According to BMO, falling energy prices will bring the rate of inflation down from 3.2% at present to below 2% by the end of this year, a rate more consistent with the economy’s underlying cost pressures. “We expect the price of crude oil (WTI benchmark) to fall from an average of US$30.30/barrel in 2000 to US$25/barrel this year and US$23/barrel in 2002” said Egelton.

He added that Canada’s inflation performance will be aided by a modest rise in the value of the Canadian dollar to above US70¢ by next year. “The Canadian dollar will benefit from less aggressive interest rate cuts in Canada relative to the US and a continuation of Canada’s far superior trade performance.”
-IE Staff