In the Bank’s January Monetary Policy Report Update, we projected that global economic growth will be tepid this year – just 1.1 per cent – before rebounding mildly to a below-trend rate of 3.7 per cent in 2010.
We are now in recession with GDP projected to fall by 1.2 per cent this year. The first half of the year will be particularly challenging with sharp falls in activity and increases in unemployment.
In our base-case projection, real GDP is expected to rebound in 2010, growing by 3.8 per cent.
Liberal finance critic John McCallum asked whether the forecast “goes out on something of an optimistic limb.”
“We don’t do optimism; we don’t do pessimism,” Carney countered. “We do realism at the Bank of Canada. We don’t do spin.”
I think they do do spin over at the Bank of Canada and I also think that any sign of solid growth above say 1.5% in 2010 and nobody will care. That is, the bluff will work whether it “works” or not because the prediction will be defended as reasonable at that time with the information and model they were working with. 2010 is a long way out for a forecast.