The Canadian economy will expand 3.3 percent in 2010, less than Royal Bank’s previous forecast of 3.6 percent, and 3.2 percent in 2011, down from 3.5 percent, according to a quarterly projection e-mailed by the bank.
The Bank of Canada this week, in a statement after it raised its benchmark lending rate to 1 percent, said it expects a more gradual recovery than it did in July because of slower U.S. growth.
Wright also said the output gap -- the difference between what the economy produces and its potential output -- will be eliminated by mid-2012. The unemployment rate will drop to 7.3 percent by the end of 2011 from July’s 8 percent figure, he forecast.
Royal Bank, which is Canada’s biggest lender, also said it now expects Saskatchewan’s economy to grow 6.3 percent this year, up from a 3.8 percent projection last quarter, and Alberta to expand 3.5 percent, from a previous forecast of 3.1 percent.
Ontario’s growth forecast was cut to 3.5 percent from 3.8 percent, while Quebec was lowered to 3 percent from 3.5 percent.