Globe and Mail: Economic forecast darkens

[Say_What]

<clips>

The Bank of Canada warned yesterday of drastically slower growth this year, blaming the runaway dollar for cutting Canada out of the global economic recovery.

The economy is now expected to expand by a modest 23/4 per cent this year — a startling half percentage point off the bank's forecast made just three months ago — as the full effect of the dollar's surge begins to be felt.

That's equivalent to a loss of about $5-billion in gross domestic product, a drop that will mean difficult restructuring for many companies (especially those involved in exporting), possible job losses and cutthroat competition from cheap imports that will put added pressure on domestic firms. It will probably also mean lower interest rates in the months to come, economists said.

And Bank of Canada Governor David Dodge acknowledged up front that, given the unprecedented run-up in the currency, he isn't sure how long the adjustment to a higher loonie will drag on. new The dollar closed at 77.20 cents (U.S.) yesterday, up almost 12 cents from this time last year.

<http://www.globeandmail.com/servlet/story/RTGAM.20040123.wecono0123/BNStory/Front/>

[Minstrel Boy]

1. the "runaway" Canadian dollar

Now there's a problem we didn't expect!

Up almost 12 cents in a year against the US dollar. Amazing.