Mild slowdown, then recovery

Money Digest, June, 2001

A severe recession in Canada is unlikely

* Economic conditions have indicated that the U.S. economy will be weak for the first two quarters of this year. It is likely to recover during the second half of the year. But the recovery will be slow and sluggish.

* Because the Canadian economy is so intertwined with the U.S. economy, the U.S. slowdown will affect Canada as well.

* However, the negative effect of the slowing economy will be less severe in Canada.

* Canadian consumers have remained more confident than U.S. consumers. This is good news.

* The tax relief offered by the federal government will stimulate growth.

While Canada's pain will be marginally less than that of the U.S., Canada's growth is unlikely to be dramatic.

On balance, our economy will be affected by the economic slowdown, but we are unlikely to face a severe recession.