(January 11 – 10:00 ET) – Strong economic growth should continue through 2000 in both Canada and the U.S., racking up growth rates of 3.5% and 3.3% respectively, say economists at CIBC.

“Remarkably, this continued strong economic performance in North America has so far not tripped any inflation land mines, which is a key reason why economic expansion has lasted so long in both countries,” says Alister Smith, CIBC deputy chief economist.

CIBC estimates that both Canada and the U.S. will benefit from significant improvement in the global economy. Japan’s economy remains very weak and China faces deflation, but most of the other Asian economies are on the upswing since the 1998 crisis. Europe’s larger economies, such as Germany, appear to be recovering too.

CIBC chief economist Josh Mendelsohn says, “Given the turnaround in many global economies, Canada should benefit doubly. The continued strength of the U.S. economy will help to maintain a healthy export market for Canadian goods and services in its principal trading partner. And, a stronger global environment will sustain or improve the prices of many of Canada’s commodity exports.” He expects domestic demand to be bolstered by employment growth and anticipated federal tax cuts. CIBC is forecasting Canada’s unemployment rate will fall to a 25-year low of 6.5% in 2000.

The risks to this outlook include: increased global inflation and a severe correction in U.S equity markets. CIBC also warns that in the long run Canada must reform its tax system, both on the personal and corporate fronts, if it is to build a resilient, flexible economy for the future.