Canadian economic growth is being hampered by SARS and the mad cow virus, and a faltering U.S. economy says Bank of Canada governor David Dodge.

Dodge reviewed some of the developments that are influencing both demand and prices for Canadian goods and services in a speech Thursday to the Conseil du patronat du Québec in Montreal.

“We’ve had lots to keep us awake over the past few months,” Dodge said. “A number of recent adverse developments are going to reduce near-term economic growth in Canada.”

His comments have economists suggesting that Canada’s central bank won’t be in any rush to hike interest rates further.

Dodge noted that the SARS outbreak has hurt tourism, not just in Toronto where the virus is centred, but in other parts of the country.

As well, he said, the closing of export markets to Canadian beef due to an isolated case of mad cow will be felt across the country.

Even the surprising jump in the value of the loonie has been a strain on the economy, he noted.

“The magnitude and speed of the Canadian dollar’s rise has been greater than anyone anticipated and will have a dampening influence on aggregate demand later this year and next,” said Dodge.

Dodge said the U.S. economy “has not been recovering as quickly as expected,” which bodes ill for growth in Canada. But he kept his comment optimistic.

“It remains our view that growth in Canada’s economy will be underpinned by the strength of domestic demand and a rebound in the U.S. economy towards the end of 2003 and through 2004,” he said.

The Bank of Canada’s next scheduled opportunity to change rates comes July 15 and two days later, it will release its latest full economic outlook.