Canada’s big banks continued to issue warnings of slowing economic growth Tuesday, with the Bank of Nova Scotia suggesting Canada could be among the first of the world’s advanced economies to fall into a technical recession.
And economists with TD cut their prediction for global growth this year.
The Scotiabank report suggested Canada’s economy could show no growth for a second consecutive quarter, the one which ends this month. Canada's economy contracted by 0.4 per cent in the April-June period.
Some economists consider two quarters of no growth or contraction in economic activity a recession.
The Scotiabank economists say trade was strong in July, but that is being countered by a slump in business investment, inventories that aren’t moving, a flat housing market and government spending cuts.
A 2.2 per cent rise in exports pushed Canada's trade deficit down to $753 million in July, almost half the level it was at a month earlier.
Statistics Canada said Thursday that exports rose by 2.2. per cent during the month. That more than outpaced the 0.5 per cent increase in imports.
Greek default assumed
In the last two days, the Royal Bank and TD Bank have both released new forecasts predicting the second half of this year will see slower growth, but they stopping short of predicting an outright recession.
The TD’s report reduced its prediction for global economic growth to 3.2 per cent, from the 3.6 per cent predict it issued in June.
TD also estimated world economic growth will be 3.2 per cent in 2012, a reduction from 3.7 per cent.
It said the risks to global recovery have intensified as both the U.S. and European economies show signs of slowing.
TD said it assumes Greece will default on its debt, but that it will be orderly and not cause a crisis for French and German banks most exposed to Greek debt.
However, it did not rule out the possibility that the default would be poorly managed and create a banking crisis.