September 22, 2010 By CBC News The Canadian Imperial Bank of Commerce has downgraded its growth forecast for Canada and the United States next year, calling the recovery a "great disappointment." The Canadian Imperial Bank of Commerce has downgraded its growth forecast for Canada and the United States next year, calling the recovery a "great disappointment." The bank's top economist Avery Shenfeld slashed his prediction for GDP growth in 2011 to 1.9 per cent growth from 2.5 per cent for Canada. He also scaled back his target for the United States to 1.8 per cent from 1.9 percent.
"The Great Recession that shattered global growth in 2008-09 is now water under the bridge, but the great disappointment of a sub-par global recovery will be with us for a good while longer," he said. The global economic recovery has largely been based on government stimulus, the report says, and now that that's being unwound, the world's economy is likely to slow.
In the four years before the recession started, the world's economy grew by five per cent per year, the report notes. But the bank now expects that will slow to a 3.6 per cent pace in 2011. Europe is a particular area for concern, but the impact of a weak U.S. economy is going to be felt everywhere, Shenfeld said.
The slowing economy will be enough to compel the Bank of Canada to alter its current path and hold rates steady from now until next spring, the report says. "As a result, the Bank of Canada will wait until spring before renewing a very gradualist path to normalcy in interest ates," Shenfeld said. Last week, Toronto-Dominion bank also lowered its forecast for Canada's economy next year to two per cent growth, down from 2.5. Royal Bank did the same earlier this month, shaving 0.3 percentage points off its 2011 forecast, to 3.2.
The Bank of Canada is currently projecting 2.9 per cent GDP growth next year. Canadian Broadcasting
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