OTTAWA - Canada is in for one of the toughest years in decades with massive job losses, plunging corporate profits and a severe contraction in national income, the Toronto-Dominion Bank says.
In one of the gloomiest economic outlooks of any major forecaster, the TD Bank rejects rosy forecasts by the federal government and the Bank of Canada for a painful, but short recession that has Canada bouncing back to health beginning in the second half of this year.
Rather, TD says, the recession will be painful and long.
"There is no doubt that 2009 will go down in the history books as one of the most difficult economic years for Canadians," says Beata Caranci, the bank's director of economic forecasting.
And Canada won't return to a "normal, steady state" for at least five years, says Caranci.
The bank estimates that the recession will result in 583,000 Canadians losing their jobs, more than the 462,000 that were thrown onto the unemployment rolls during the 1990-91 recession.
As well corporate profits are likely to drop by about one-third this year, and the wealth of Canadians will take a big hit from falling commodity prices, a point made by parliamentary budget officer Kevin Page in his report Wednesday.
"With nominal (gross domestic product) to decline in 2009 as a whole (by 4.5 per cent) for the first time on record, this will come to bear on employment, wages, capital investment and government revenues as the year rolls forward," the bank report states.
The report predicts Canada's economy will contract for four quarters for a total GDP retreat of 2.4 per cent this year, twice the Bank of Canada prediction.
And rather than a robust bounce-back of 3.8 per cent as the central bank envisions, Caranci says Canada's recovery will barely be noticeable in 2010 with a minuscule 1.3 per cent growth rate that will only have taken the economy part-way out of the pit it has dug.
A separate forecast by the Royal Bank, also released Thursday, is more sanguine.
But it too says the recession will be deeper and longer than it predicted three months ago.
The RBC report says the economy will contract 1.4 per cent this year before bouncing back moderately with a 2.4 per cent advance in 2010.
Chief economist Craig Wright said he believes the U.S. economy is showing signs of having hit bottom and will lead to a turnaround in Canada, but cautions that there are many uncertainties that could impact on the forecast.
