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Confidence wanes over Canada's recovery

CANADA'S finance minister says the country's economic recovery will likely be modest and job losses will mount into 2010 even after growth has begun.

Jim Flaherty gave his most recent, sobering assessment of economic prospects in a conference call from Chile last Friday, after a meeting with finance ministers from the Americas.

Responding to surprisingly high job losses reported in the United States earlier last week, Flaherty said all his colleagues were concerned with the toll the recession was taking on workers.

He warned that while the economy may be stabilizing, labor markets were not.

"We'll start to see stabilization, which we are seeing now, and then a return to economic growth but continuing deterioration in employment," he said.

Job losses

Last Thursday, the US labor department reported that payrolls fell by 467,000 in June - about 100,000 more than had been expected - raising concerns that the recession could persist longer than anticipated.

In Canada, the economist consensus is calling for another 30,000 job losses for June. Since October, Canada has lost 363,000 jobs.

In the past, the finance minister has cautioned that difficult times remain for Canadians, but he has also expressed confidence that Canada would lead most industrialized countries in the swiftness and strength of the recovery.

In last Friday's assessment, he appeared more circumspect, saying there was agreement among finance ministers that the rebound would be tepid.

"The anticipation is that the recovery will be modest, so that we'll experience some continuing increase in unemployment, but as we move into 2010, we'll start to see modest recovery," he said.

Canada's unemployment rate rose to 8.4 percent in May, the highest level in 11 years.

Most of the job losses have occurred in manufacturing in central Canada. More than 70 percent of Canada's exports go to the US.

The Canadian government has committed C$22.7 billion (US$19.5 billion) in stimulus funds earmarked for this year.

Prime Minister Stephen Harper has said Canada's deficit of C$50.2 billion is significant, but more manageable than other countries.


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