Canada’s economy faces a bump on the road on its path to recovery notes a new forecast by Canadian Imperial Bank of Commerce (CIBC).
The CIBC report says that the economy will grow by a strong 3 % annualized in the first half of this year as factories work to replenish depleted inventories and the housing market remains to be strong.
In the second half of the year, the economy will be facing flattening home prices and factory activity stalling, which results in a pause in job creation.
CIBC says that growth will fall below 2% in the second half of the year.
For 2010, as a whole, growth will be an average of 2.3%, which his well below the Bank of Canada’s forecast of 3%.
CIBC also predicts that the Bank of Canada will raise interest rates before the U.S., but the second half difficulties and an appreciating dollar will cause the central bank to put a hold later concerning raising rates.
With interest rates at the possibilty of rising early, it could possibly slow down the housing market, however it should not be at the point where there is negative growth. I do not expect to see interest rates bring down the housing market, especially if the labour market improves as it is expected to.
Glen Chapman
Broker of Record with Club “100″ GMAC Real Estate
www.club100realestate.com
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