TORONTO, Feb 23 - The Bank of Canada said on Monday the Canadian economy faces a "difficult" 2009, but repeated the recovery will be supported by past depreciation of the Canadian dollar and timely monetary and fiscal policy.
Canadian real gross domestic product is expected to drop 1.2 percent in 2009 on an average annual basis but will rebound 3.8 percent in 2010, Bank of Canada Senior Deputy Governor Paul Jenkins said at the Colleges Ontario Annual Conference.
"In the current environment, the Bank's projections -- and those of all forecasters -- are subject to an unusually high degree of uncertainty," Jenkins noted on a slide presentation.
The central bank last week said economic data so far has been consistent with its forecast of a sharp contraction in the first quarter on an annualized basis.
Jenkins also said the global economy had deteriorated recently and that the central bank was working closely with its partners of the Group of Seven and G20 to strengthen regulation of financial global markets.
He said policymakers around the world have acted "aggressively and creatively" but much work was still to be done.