Canada will fare better but may take longer than the U.S. to emerge from the longest and deepest global recession since the Second World War, according to one of the world's leading forecasting firms.

IHS Global Insight economists told clients in a conference call Wednesday that any chances the recession will be short-lived are a dream.

"This is the deepest and longest world recession in the postwar era," said Nigel Gault, the firm's chief economist in the U.S.

"The global depth and reach of this downturn makes it much more difficult for any individual country to pull out because there's such a drag coming from the rest of the world."

Canadian economy to contract 2.5 per cent

Gault and Brian Bethune, who presented the Canadian outlook, said the world economy will contract by more than two per cent this year — an unprecedented amount in the modern era — with the U.S. economy shrinking 3.7 per cent and Canada's 2.5 per cent.

The Canadian retreat is more than double the last published estimate by the Bank of Canada in January, although consistent with more recent private-sector forecasts.

Global Insight's prediction differs from Prime Minister Stephen Harper's assertion that Canada will bounce back sooner and higher than most countries, particularly the U.S.

In fact, Bethune said Canada may trail the U.S. coming out of the downturn.

And the forecaster also dispelled any notion that the recession will look like a V, with a deep contraction and a quick upturn, as anticipated by the Bank of Canada and the federal budget. Think of a wide U, the forecaster said, with the economy dragging along the bottom for some time.

Recovery to begin in late 2009

"The good news is that much of that decline is already behind us," said Gault, but the recovery won't begin until late in 2009 and 2010 will show very modest growth.

Meanwhile, in Ottawa, Canada's public budget officer said Wednesday that the federal government is likely to fall about $9 billion further into the hole over the next two years than projected in January.

Kevin Page told a parliamentary committee that the economy has deteriorated so much since the January budget that any stimulus from increased government spending will have been swamped by lower growth.

Page said Ottawa will record a deficit of about $38 billion this fiscal year and $35 billion in 2010-11, about $9 billion more over the two years than Ottawa projected.

As well, he said, 385,000 jobs will vanish in the first half of this year.

The Canadian economy shed about 212,000 jobs in the first two months of 2009.

Page said he disagrees with the government's March 10 assessment that the economy is behaving broadly in line with what the budget predicted.