Governor Reviews Recent Economic Developments

Bank of Canada Governor David Dodge reviewed some of the developments that are influencing the Canadian economy in a speech today to the Metropolitan Halifax Chamber of Commerce.

The Governor noted that continuing weakness in the U.S. and global economies and concerns about the economic impact of Severe Acute Respiratory Syndrome (SARS) and Bovine Spongiform Encephalopathy (BSE) will dampen demand for Canadian goods and services. "These developments likely mean a very weak second quarter and point to some continuing softness in the Canadian economy in the third quarter," said Mr. Dodge.

"Looking forward, it remains our view that growth in Canada's economy will be underpinned by the strength of domestic demand and a rebound in the U.S. economy towards the end of 2003 and through 2004," the Governor said. "However, the appreciation of the Canadian dollar against the U.S. dollar, which is an outcome of various influences at work in both the Canadian and global economies, will be a factor influencing aggregate demand."

The Bank of Canada will provide Canadians with a more considered and complete picture of its views on the economy when it publishes it s next Monetary Policy Report Update, on 17 July.