Canada’s economic growth is slowing in the first half of 2003, but both the Canadian and United States economies will strengthen in 2004 if the war in Iraq is short, according to The Conference Board of Canada’s Canadian Outlook, Spring 2003.

“Canada’s economy is now growing at the same pace as the U.S. economy,” said Paul Darby, director of economic forecasting. “U.S. economic weakness late in 2002 and in the first half of 2003, as well as a stronger Canadian dollar, is hurting Canada’s exports. However, if the U.S. wins the Iraq war quickly, then its economy will rebound in the second half of the year, triggering higher growth in Canada as well.”

The Spring Outlook forecasts Canada’s real GDP growth at 2.7% in 2003, down from 3.2% in the Winter forecast, and only slightly higher than U.S. growth.

As the U.S. economy improves later this year, Canada will post growth of 3.3% in 2004, matching the U.S. performance.

The Conference Board’s forecast assumes a successful two-to-three week military campaign for U.S.-led forces in Iraq. Resurgent household and investor confidence in the U.S., along with falling oil prices, would produce a solid economic rebound beginning in the third quarter of 2003 and continuing into 2004.

According to the Conference Board, the February federal budget will help sustain Canadian economic activity this year. Canada’s housing starts have been spectacular throughout 2002 and into 2003, but will begin to slow later this year and in 2004. The auto sector will be especially hard hit in 2003, as U.S. car sales slump and inventories are high.

http://www.newswire.ca/releases/March2003/26/c4233.html