Press Release No. 09/401

Press Release No. 09/401
November 12, 2009

Mr. Charles Kramer, Mission Chief for Canada of the International Monetary Fund (IMF), released the following statement today at the conclusion of a staff visit to Canada:¹

“Canada’s economic outlook is improving. Indicators signal a moderate pickup in economic activity in the second half of 2009, following the significant declines during the recession. Financial conditions are normalizing steadily, with credit spreads narrowing and borrowing costs easing to low levels. Inflation pressures are subdued against the backdrop of sizeable slack in the economy. Financial institutions, while confronted with volatile markets and a subpar economic environment, have proven resilient through the recession, thanks to rigorous regulation and prudent bank practices.

“The improving economic outlook reflects both the global recovery and a highly expansionary policy stance. In a range of partner countries, financial conditions have stabilized, trade has rebounded, and economic activity is firming. Meanwhile, Canada’s large fiscal stimulus package and unprecedented monetary easing are supporting domestic demand. In this context, and with household and financial institution balance sheets stronger than in many countries, Canada’s economy is relatively well positioned to resume expansion.

“Nevertheless, it will be essential to maintain a highly accommodative macroeconomic policy stance as intended until the economic recovery is firmly established, in light of risks on the horizon. These risks include weaker-than-expected global growth and a further strengthening of the Canadian dollar. In the meantime, continued communication regarding the strategy for unwinding the extraordinary stimulus can bolster confidence that the exit can be implemented smoothly once recovery is firmly underway.

“Canada’s resilience bears testimony to its strong and credible policy frameworks that responded proactively to the global crisis. While the outlook is not without risks, maintaining supportive policies as the economy recovers can promote a timely return to sustainable growth.”

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¹ Staff visits are informal staff missions, generally aimed at updating staff on recent developments and the economic outlook.