The Canadian Press

Canada’s economy faces a speed-bump on the road to recovery, says a new forecast by one of Canada’s big banks.

CIBC says the economy will grow by a strong 3% annualized in the first half of this year as factories work to replenish depleted inventories and the housing market remains strong.

But the second half of the year faces an economic reckoning, with home prices flattening and factory activity stalling, resulting in a pause in job creation.

The bank says growth will fall below 2% in the second half of the year.

For 2010 as a whole, growth will average 2.3%, well below the Bank of Canada’s forecast of 3%.

CIBC also predicts the Bank of Canada will move before the U.S. Fed in raising interest rates, but the second half difficulties and an appreciating dollar will cause the central back to put on the brakes later about raising rates.

IE