Canada’s economy should grow by 2.8% in the final half of 2007 and 2.5% next year, according to the latest forecast from RBC Financial Group.

The bank says strong consumer and business spending will more than offset ongoing export-related weakness resulting from slower U.S. growth and the high Canadian dollar.

Craig Wright, vp and chief economist of RBC, says Canada should continue to sustain relatively solid growth through 2008.

The RBC report says strong demand from emerging markets, such as China, has pushed prices higher for numerous natural resource products exported by
Canada.

“Despite recent financial market volatility, Canada should continue to sustain relatively solid economic growth for the rest of 2007 and into 2008,” says Wright.

“Strong consumer and business spending will more than offset ongoing export-related weakness resulting from slower U.S. growth and the high Canadian dollar.”

While growth in overall export volumes is weak, particularly to the U.S., prices for natural resource exports have skyrocketed and are helping to lead Canada’s growth.

Wright also says the Canadian dollar appears likely to remain above parity through the end of the year, but will weaken somewhat in 2008 and end the year at about US93¢.