BUSINESS
10/25/2011 02:51 EDT | Updated 12/25/2011 05:12 EST

Flaherty Promises New Fiscal Update

CP

Canada’s Finance minister, Jim Flaherty, said Tuesday the federal government will release a new fiscal update in the coming weeks with a revised outlook for the national economy.

Flaherty made his comments at a news conference in Ottawa after meeting with private sector economists to consult on their expectations for growth.

Afterward, Flaherty said the economists had lowered their expectations from their estimates in the spring.

"The private sector economists are saying now that they anticipate real GDP growth for this year in Canada for 2011 at 2.2 per cent. In March they thought 2.9 per cent ... It is a significant downgrading but it is relatively modest."

The pace of recovery, he said, depends on how promptly European leaders and American lawmakers grapple with their respective debt problems.

"Canada is not immune to those recent global pressures and they will continue to limit growth in Canada for the remainder of this year and in 2012," Flaherty said.

Flaherty said he expects to stay on track for a balanced budget, despite the Bank of Canada's lowered prediction for national economic growth this year.

Earlier Tuesday, the bank said the economy likely expanded at a modest 2.1 per cent — most of it in the first quarter — and will fare even worse at 1.9 per cent next year.

Both numbers were 0.7 percentage points lower than the bank had projected in July.

Slower growth will make it more difficult for Canada's 1.4 million unemployed to get work and lower the 7.1 per cent national unemployment rate.

With files from The Canadian Press