Conference Board cuts Canadian outlook for 2009

The battering that global financial markets have taken in recent weeks has prompted one research group to cut its outlook for the Canadian economy for 2009.

The Conference Board of Canada on Monday cut its growth forecast to just 1.5 per cent for next year. That is down from the 2.2 per cent growth prediction that the think-tank offered on Oct. 15.

The Conference Board issued the downgrade, saying a "recession-plagued" U.S. economy will take its toll north of the border.

Despite offering up a weaker forecast, the Conference Board is still confident that the Canadian economy will avoid tipping into recession.

"High resource prices have bolstered Canadians' real income for six years, including 2008. In 2009, this source of strength will evaporate," said Pedro Antunes, the director of the Conference Board's national and provincial economic forecast.

"Still, Canada is expected to skirt a recession in 2009. Although the economy in general is slowing, it is still growing."

The Conference Board forecast real GDP growth in the United States to be just 0.5 per cent in 2009. That is down sharply from the 1.7 per cent real growth it predicted almost three weeks ago.

The group sees real U.S. household spending contracting for five consecutive quarters until late 2009 because of low consumer confidence, coupled with significant losses in wealth following the drop in home prices and stock values.