The Canadian recession is essentially over but the recovery remains dependent on continued government stimulus and low interest rates, the Bank of Canada says.
The country's central bank made the optimistic declaration while cautioning that the initial recovery will be modest at best.
It projected the Canadian economy will advance by 1.3 percent by September and by 3 percent in the next quarter, but bank governor Mark Carney said the recovery will be "gradual."
Even though the economy will bounce back at least twice as strongly as in the United States, it will take two years for Canada to return to full economic capacity, the bank said in its quarterly report.
Possibly hampering the projections are the fragile financial systems in the United States and Europe and the higher-valued Canadian dollar that makes Canada's exported products more expensive.
Canadians have responded to interest-rate cuts and growing confidence by spending now on houses, cars, furniture and appliances, the report noted.
Higher commodity prices, a stable financial sector, healthy wage increases averaging 3 percent and household debt that is lower than other countries are also helping the return to better financial times, it added.
Forest fires force thousands to flee
Thousands of people have been forced from their homes in the past week by raging forest fires in British Columbia's Okanagan Valley.
Firefighters from across Canada have been called in to help as windy, hot and dry conditions are helping to fuel the blazes.
About 2,200 people left their homes in Fintry, north of Kelowna, on Thursday morning, a day after 11,200 people from West Kelowna were allowed to go home. Three houses and a mobile home were destroyed.
News in brief
• Forensic tests confirmed the remains of a young girl found near Mount Forest, Ontario, were that of missing Victoria "Tori" Stafford, of Woodstock. The 8-year-old girl didn't return home after school on April 8. Two months ago, police arrested Michael Rafferty and Terri-Lynne McClintic, charging them with kidnapping and murdering the girl.
• Train engineers at Via Rail went on strike Friday at noon, leaving thousands of travelers scrambling to find other transportation. Contract talks for the 340 Teamsters members failed to reach a settlement to avoid the strike. Via had already canceled some departures in anticipation of a walkout and wasn't providing alternate service.
• John Babcock, the last-known surviving Canadian soldier from World War I, marked his 109th birthday at his favorite restaurant in Spokane, Washington, where he now lives. Attending the party was Veteran Affairs Minister Greg Thompson who called him a "remarkable man." Babcock grew up on a farm near Kingston, Ontario.
Facts and figures
The Bank of Canada decided to leave its historically low interest rate unchanged at 0.25 percent while the prime lending rate remains at 2.25 percent.
News of better economic times pushed Canada's dollar higher to 92.23 cents U.S. Friday while the U.S. currency returned $1.0842 Canadian, before bank exchange fees.
Stock markets are higher, with Toronto's composite index at 10,714 points while the TSX Venture index is 1,141 points.
Lotto 6-49: (Wednesday) 8, 14, 24, 36, 40 and 42; bonus 19. (July 18) 2, 4, 15, 39, 45 and 49; bonus 37. Super 7: (July 17) 12, 13, 31, 33, 37, 44 and 46; bonus 34.
• A tentative agreement has been reached to end the strike by civic workers in Windsor, Ontario. The 1,800 workers in the city bordering Detroit went on strike April 15 over a dispute about retirement benefits for new workers. In Toronto, the strike by 24,000 civic workers is in its second month with garbage piling up and municipal services suspended.
• The Nova Scotia Utility and Review Board will take over responsibility for setting gasoline prices as of Oct. 1. The government agency now responsible, Service Nova Scotia, had been criticized by opposition politicians for always setting the highest prices. The province got into price regulation in 2006 believing it would mean less volatility at the pumps and a guaranteed profit for retailers.
• How about a trashy vacation? The Holiday Inn at Toronto airport is inviting strike-weary Torontonians to stay over and bring with them their household garbage. Since the civic workers' strike has stopped garbage collection, the hotel says guests can check in with two bags of trash. They can also enjoy a swim in the hotel pool, as City of Toronto pools remain closed by the strike.
Jim Fox can be reached at email@example.com.