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December 2008
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Aggressive policy actions confront deepening economic malaise
- The dramatic worsening in financial markets since mid-September and the attendant credit tightening are expected to impede global growth from the remainder of this year and going into 2009.
- Commodity prices dive.
- Inflation concerns recede as worries about health of the global economy dominate outlook.
- Central banks aggressively ease monetary policy.
- Fiscal stimulus packages from around the globe have been announced with more on the way.
- Tentative signs that illiquidity in some financial market strains are starting to ease.
- Investor confidence in tatters.
U.S. economy slipping off the brink
- U.S. recession deepening.
- Fed and U.S. government aggressively responding to crisis.
- Fed cuts funds rate to lowest level on record with quantitative easing to increasingly provide more of the stimulus.
A rocky road for Canada
- U.S. downturn and high cost of capital to lead to Canadian recession.
- Slowdown in Canada to be less severe compared to other countries.
- Inflation rate to fall temporarily below Bank of Canada’s lower limit of 1%.
- Overnight rate cut to 50-year low and policy expected to remain accommodative throughout 2009.
- Eventual easing in credit spreads to support recovery late next year.
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