Wednesday, July 02, 2008

Canada's Cautious on Economy

Canadian Finance Minister said he was concerned that economic weakness in the United States, his country's top trading partner, could hold back the domestic economy in the coming months.

He welcomed Monday's stronger-than-expected report on April gross domestic product, which showed Canada's economy had expanded for the first time in three months.

Even so, "one month does not make a trend.

He was concerned about the impact of the U.S. housing crisis on the economy south of the border and believed the property market would not sort itself out until next year.

Despite the headwinds, he believed Canada's economy could continue to grow, though at a slower pace, due to the country's solid fundamentals and a strong labor market.

A rebound in manufacturing helped Canada's economy grow by 0.4 % in April after two months of contraction. The April performance was slightly more robust that market expectations of a 0.3 % increase, and it followed contractions in March and February of 0.2 % and 0.3 %, respectively.

The Canadian economy shrank by an annualized 0.3 %in the first three months of the year, the first quarterly contraction since since April-June 2003.

He was still confident that the government would show a budget surplus this year.

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