Canada Economic Outlook for 2010

Jan. 5 2010 (Bloomberg) — Canadian Prime Minister Stephen Harper said the outlook for the economy in 2010 is “very different” from last year’s recession as the focus shifts to high unemployment and a record deficit.

“The first thing we’re going to do when we come back is have the second stage of our economic action plan, the budget and new financial measures,” Harper said today in an interview with the Canadian Broadcasting Corp. “We’re in a very different kind of economic year and that’s what we’re adjusting to.”

Harper recessed Parliament on Dec. 30 and it will reconvene March 3 after the Vancouver Winter Olympic Games. Finance Minister Jim Flaherty will present a budget the following day.

Canada, the U.S.’s biggest trading partner, is emerging from its first recession since 1992, after output shrank for three straight quarters through June. Bank of Canada Governor Mark Carney, who predicted in October the economy will grow 3 percent this year, has pledged to keep the benchmark interest rate at a record low 0.25 percent through June to spur growth unless the inflation outlook shifts.

The governing Conservatives have forecast a record deficit of C$55.9 billion ($53.8 billion) this fiscal year because ofslowing revenue, increased claims for unemployment benefits and costs associated with an auto industry bailout.

Harper said he doesn’t foresee major cuts to public spending this year. The government is in the second year of a plan to combat the economic slump and “extraordinary spending”measures will end by early 2011, he said.