Recession over, says Bank of Canada

But unemployment expected to increase
||Last Updated: 08/06/2009

There is a light at the end of the economic tunnel with the Bank of Canada announcing the end of the recession.

After contracting since the last quarter of 2008, the economy will grow by an annual rate of 1.3 per cent from July to September, stated the bank's quarterly Monetary Policy Report. This is in stark contrast to the bank's prediction in April that the economy would shrink by one per cent in the same period.

By the fourth quarter, the bank predicted the economy should be growing at a rate of three per cent.

"Stimulative monetary and fiscal policies, improved financial conditions, firmer commodity prices, and a rebound in business and consumer confidence are spurring domestic demand growth," stated the bank's report.

"However, the higher Canadian dollar, as well as ongoing restructuring in key industrial sectors, is significantly moderating the pace of overall growth."

If the bank's forecast comes true, the recession will have lasted just nine months.

However, Bank Governor Mark Carney cautioned employment won't bounce back as quickly. In fact, he predicted unemployment would continue to climb.

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