Canada's economy should grow faster than western Europe, Japan and the United States, according to a new forecast by the Quebec-based Desjardins Group released Monday.

That is because the country's domestic economy is in better shape than almost any other western industrialized nation, said economists.

"Its strong economy makes Canada a special case," said the report.

Decent demand for new products and services by Canadian consumers and corporations in 2010 means that the country will not be overly reliant on stagnant overseas markets for improved sales, Desjardins said.

Canada's retail sales helps boost overall economy. (CBC)

Desjardins' report estimates that world trade fell more than 20 per cent in volume between mid-2008 and mid-2009 and has recovered by a smaller amount since that time.

The financial institution now figures Canada's gross domestic product (GDP) could grow by three per cent in 2010.

If correct, the country's economic expansion would surpass the American growth rate of 2.7 per cent for the current year and outpace the overall average of countries using the euro by nearly two full percentage points.

Joining the herd

Desjardins is the latest in a growing list of economists and equity strategists who see Canada as one of the best performers in terms of economic growth and equity markets in 2010.

The financial group, for instance, believes the TSX index will jump by 11.5 per cent in 2010 and almost 10 per cent in 2011.

That relatively optimistic outlook — coming on the heels of a 2009 that saw the TSX bounce by 50 per cent — has been echoed by other stock market experts.

"In spite of its significant outperformance in 2009, we still favour the superior fundamentals of most Canadian equities, as well as the Canadian dollar over that of the U.S.," according to a January commentary by Gluskin Sheff, a major Toronto investment company.

Economic forecasts

Similarly, in recent weeks, a number of economists have produced strong forecasts for economic growth for Canada.

The Bank of Montreal recently raised its forecast of first-quarter Canadian GDP growth of 4.7 per cent, up from its earlier prediction of the same period.

And the Royal Bank of Canada produced a March forecast that pegged the country's economic expansion at 3.1 per cent for 2010.