Expect some spillover from US recession: Bankers

LONDON, Ont. — Canada’s struggling manufacturing, forestry and pulp and paper sectors should brace for an even rougher ride, Bank of Canada senior deputy governor Paul Jenkins told a business audience in London, Ont. this week.

At the same time in Washington, his American counterpart, U.S. Federal Reserve Chairman Ben Bernanke, admitted that his country may already be in recession, sparking another freefall in stock prices on Wall Street.

According to Canadian Press, Jenkins implied that Canada’s economy is being sideswiped by the U.S. downturn, and the depression in our hardest-hit sectors could be too deep to reverse in the near term.

At the same time, commodities — oil, precious metals and grains — are robust because they’re in high demand all over the world, especially the booming Chinese and Indian economies.

Standing before U.S. Congress, Bernanke was reluctant to use the R-word, but acknowledged that GDP will not grow, and perhaps contract slightly, during the first half of 2008.

TD Bank’s chief economist Don Drummond told CP he shares those projections, adding that the flattish U.S. economy will continue to hammer Canada’s export-dependant sectors.

Experts say that Canada must begin to evolve from being a low-value manufacturing nation to a higher value one. That means more sophisticated, less labor-intensive sectors.

— with files from Canadian Press