OTTAWA — There are signs that Canada’s economy has stabilized, Finance Minister Jim Flaherty said Monday as a major international think-tank cited Canada among countries in the leading-edge of recovery.
The minister’s remarks came as the Organization for Economic Co-Operation and Development named Canada among four industrialized countries showing signs of having reached a bottom in the economic downturn.
The OECD cautioned it was still too early to say definitively whether the signs of improvement were “temporary or a more durable turning point,” but said positive indicators were present in a majority of its 30 member countries.
“The OECD composite leading indicators for April 2009 point to a reduced pace of deterioration in most of the OECD economies with stronger signals of a possible trough in Canada, France, Italy and the United Kingdom,” the organization said.
At a Montreal event, Flaherty expressed “cautious optimism that a global economic recovery may not be far behind.”
He predicted Canada will lead the way as the recovery takes hold.
Flaherty said Canada is in the best shape of any G7 country, despite a federal government deficit that is expected to be “slightly more than $50 billion” this fiscal year.
The government’s budget originally estimated the 2009-10 deficit would be substantially lower, at a still-large $33.7 billion, but the Conservatives announced in late May that it would be about $16 billion higher than that due to a dropoff in revenue because of the recession and because of the cost of a bailout for the Ontario auto industry.
Statistics Canada reported Friday that the country’s unemployment rate had hit an 11-year high of 8.4 per cent, the total number of Canadians who have lost their jobs since the recession began in October increased by 41,800 to 363,000.
But Flaherty said Monday that all of the measures in Canada’s economic action plan to help Canadian households and businesses are “in place and fully operational.”
He spoke after the Canada Mortgage and Housing Corp. reported that the annual rate of housing starts increased by about nine per cent to 128,400 in May from 117,600 in April.
That was the latest of a string of economic indicators in Canada that have shown a slight pick-up in the past month or two, although from very low levels.
The OECD leading indicators report found that Canada’s index had increased by 0.4 points in April from March, although it remained 7.6 points lower than last year. It was the second consecutive month that Canada’s index had improved.
The organization said China and India, which are not OECD members, also showed signs of having reached a trough.
But it added that “major non-OECD economies still face deteriorating conditions.”