OTTAWA — Canada will fare better but may take longer to emerge from the longest and deepest global recession since the Second World War, says a new analysis from one of the world’s leading forecasting firms.
IHS Global Insight economists told clients in a conference call Wednesday that any chances the recession will be short-lived are a dream.
“This is the deepest and longest world recession in the postwar era,” said Nigel Gault, the firm’s chief economist in the U.S.
“The global depth and reach of this downturn makes it much more difficult for any individual country to pull out because there’s such a drag coming from the rest of the world.”
Gault and Brian Bethune, who presented the Canadian outlook, said the world economy will contract by more than two per cent this year — an unprecedented amount in the modern era — while the U.S. will shrink 3.7 per cent and Canada by 2.5 per cent.
The Canadian retreat is more than double the last published estimate by the Bank of Canada in January, although consistent with recent private sector forecasts.
The Conservative government can take heart in the estimate that Canada will fare better than most industrialized countries, significantly better than the U.S. and much better than Japan, which would see a tumble of up to seven per cent in its gross domestic product this year.
But Global Insight differs from Prime Minister Stephen Harper’s assertion that Canada will bounce back sooner and higher than most countries, particularly the U.S.
In fact, Bethune says Canada may trail the U.S. out of the downturn.
And the forecaster also dispels any notion that the recession will look like a V, with a deep contraction and a quick upturn, as anticipated by the Bank of Canada and also the federal budget. Think of a wide U, they say, with the economy dragging along the bottom for some time.
“The good news is that much of that decline is already behind us,” said Gault, but the recovery won’t begin until late in 2009 and 2010 will show very modest growth.