FXstreet.com (Barcelona) - Global economy growth has weakened in the first quarter of the year, weighed by the US slowdown as well as by ongoing dislocations in financial markets, Canadian economy has not been unaware of this trend, according to the Bank of Canada's latest Monetary Policy Report.
Canadian economical growth has moderated on the quarter to March as the decline on exports has offset the growth on domestic demand, high employment levels and improved terms of trade.
Core and total CPI are running around 1.5% year on year, although the underlying trend of inflation is estimated to be running around a 2.0% annual pace, consistent, according to the bank, with an economy running just above its production capacity.
The bank forecasts a deepening of the US slowdown with the housing market crisis and tighter credit conditions squeezing harder US consumer spending.
The Bank of Canada expects US economic slowdown and financial conditions to have direct consequences in Canadian economy, such as a decline on exports which will put a serious obstacle to Canadian economic growth. In the other hand, the financial markets turmoil will produce tighter credit conditions, and consumer confident in Canada will soften, nevertheless, the Bank expects domestic demand to remain strong.
The Bank expects Canadian economy to grow around 1.4% in 2008, 2.4% in 2009, and 3.3% in 2010.