XPost: can.francais, can.taxes, soc.culture.canada 
 From: abc@123.cl 
  
 Growth brought to you by: The government 
  
  
 By Alia McMullen,August 31, 2009 
  
  
 Canada€s government and central bank have achieved what they set out to 
 do: injected life back into the economy through stimulus, stoking 
 growth in June after 10 consecutive months of decline. 
  
 Canada€s government and central bank have achieved what they set out to 
 do: injected life back into the economy through stimulus, stoking 
 growth in June after 10 consecutive months of decline. 
 Photograph by: National Post, National Post 
  
 Canada€s government and central bank have achieved what they set out to 
 do: injected life back into the economy through stimulus, stoking 
 growth in June after 10 consecutive months of decline. The return to 
 growth may be a welcome change, but with the economy still heavily 
 dependent on its stimulus addiction, activity in the coming year will 
 remain shaky until the private sector can stand on its own two feet. 
  
 Economists, like Krishen Rangasamy from CIBC World Markets and 
 S€bastien Lavoie from Laurentian Bank Securities, said unemployment and 
 weak export demand would likely rattle the figures until the end of 
 2010 when the private sector will eventually begin to strengthen. 
  
 €[It] will take approximately twice the time for the Canadian economy 
 to fully recover from the contraction experienced between the fourth 
 quarter of 2008 and the second quarter of 2009.€ Mr. Lavoie said. 
  
 Real gross domestic product increased by 0.1% in June, the first 
 monthly increase since July 2008, Statistics Canada figures showed 
 Monday. The rise signalled the economy had begun to improve as it 
 entered the third quarter, the period in which the Bank of Canada and 
 most economists predict the recession to have ended. 
  
 But the economy has a steep hole to climb out of. Real GDP contracted 
 by a worse-than-expected annualized rate of 3.4% in the second quarter, 
 while the decline in the first quarter was revised down to 6.1% from 
 5.4%, marking the worst quarterly performance on record. 
  
 Mr. Rangasamy said higher government spending and improved consumption 
 and residential investment offset declines in exports and business 
 investment in the month. All these sectors have benefited of late from 
 accommodative fiscal and monetary policy; residential investment has 
 picked up amid record low interest rates of 0.25%; consumption has been 
 underpinned by employment insurance benefits and government spending 
 has helped support sectors of the economy. 
  
 On a quarterly basis, government spending rose 5%, annualized, in the 
 second quarter, while government investment in buildings and 
 engineering projects increased 4.7% for an 11th consecutive quarter. 
  
 €Overall, efforts by the Bank of Canada and governments to mitigate the 
 size of the contraction did pay off in 09 Q2,€ Mr. Lavoie said in a 
 note. 
  
 Ryan Brecht, and economist at Action Economics said the government was 
 responsible for 1.2% of total GDP in the quarter after adding 0.7% in 
 the first quarter. On the other hand, business investment fell 9.7% in 
 the period after a 28.1% plunge in the first three months of the year. 
  
 The stimulus has helped the service sector race well ahead of goods- 
 producing industries, which are still struggling heavily, noted Douglas 
 Porter at BMO Capital Markets. €It€s no news flash that goods 
 industries are weaker during a downturn, as they are naturally much 
 more cyclical,€ Mr. Porter said. €However, the divergence in 2009 is 
 unheard of in the past 30 years.€ 
  
 Mr. Rangasamy said GDP would likely rise about 3% in the third quarter 
 and remain firm in the fourth quarter because the economy would likely 
 benefit from the need to rebuild inventories both domestically and in 
 the United States. However, once these inventories were restocked, the 
 pace of growth would likely ease in the first half of next year, 
 especially with unemployment on the rise. 
  
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