Finance Minister Jim Flaherty may table the next federal budget early to include infrastructure spending and other provisions to stimulate the ailing economy.

Finance Minister Jim Flaherty said Monday Canada is not in a recession — yet. (Canadian Press)

The Canadian economy is rapidly losing speed, and demands government action before the March budget is tabled, Flaherty said Monday.

He said any package could be included in a sooner-than-scheduled budget, although he did not give a specific date. His officials also suggested that announcing stimulus measures before the next budget is a possibility.

Flaherty noted that the government has already committed to a $33-billion infrastructure fund that needed to begin releasing money sooner rather than later.

"This needs to happen as soon as possible," Flaherty said at a news conference in Toronto, after he gave a speech to a conference on public-private partnerships.

"We are working with the provinces, the territories, the municipalities, to accelerate our infrastructure investments."

Earlier in the day, he made no promises that a stimulus package would be forthcoming when he delivers his economic update later this week.

The federal government will update the House of Commons Thursday on where it expects the Canadian economy and next federal budget are headed, Flaherty said during a news conference, but he didn't offer any plans for a broad support package.

The update is expected to include plans to slow down growth in public service compensation and equalization payments to provinces. As well, Flaherty could announce efforts to ease pension requirements for cash-strapped corporations and give seniors additional flexibility on when they must draw down from their registered retirement plans.

Britain on Monday became the latest country to unveil a scheme to try to stimulate its domestic economy in the face of global financial turmoil.

Flaherty said the Canadian government has already put stimulus into the economy equal to about two per cent of the country's gross domestic product.

"Fortunately, we acted in advance," Flaherty told reporters. "A lot of countries have had to play catch-up on that stimulus."

Recession possible

Flaherty also told reporters that the country is not in a recession right now.

"Going forward, I think it is reasonable that we may have a technical recession," he said, meaning the current quarter and first quarter of 2009 are expected to see the economy contract.

Technically speaking, a recession is defined as two consecutive quarters of gross domestic product contraction.

On Sunday, at the Asia-Pacific Economic Cooperation group's summit in Lima, Prime Minister Stephen Harper made similar comments that the economy appears headed for a technical recession and might have already slowed to "just about zero" growth.

Harper also suggested during the summit that the Canadian government will introduce a stimulus package to boost the economy, while trying to avoid setting the stage for a long-term government deficit.

Signalling a shift in his usual anti-deficit stance, he acknowledged that countries that choose to implement fiscal stimulus packages will likely find it necessary to run budgetary deficits.

The prime minister noted, however, that whatever short-term new spending his government pursues, it "will ensure that Canada does not return to long-term structural budgetary deficits."

With files from the Canadian Press