Boston, MA -- (SBWIRE) -- 03/05/2013 -- Core Views

The Canadian economy faces major external headwinds, but should avoid falling into recession. The mix of growth will continue to shift away from private consumption as household balance sheets remain under pressure.

Still-high global commodity prices will support Canada's terms of trade. With a strong Canadian dollar and low interest rates, business investment will be a major driver of growth, though the trade balance will remain in deficit.

Among developed states, and in stark contrast to the neighbouring US, Canada has an enviable fiscal record. We see very limited risk of a Canadian fiscal crisis and, in fact, see debt ratios declining from this year onwards, with the budget returning to surplus by the end of the forecast period in 2017.

Key Risks To Outlook

Downside Risks To Growth: A collapse of the European monetary union would send shock waves through global trade and financial markets. A hard economic landing in China would lower demand for commodities, damaging Canada's terms of trade. Weakness in the domestic real estate market also poses a threat.

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