People walk past a Toronto-Dominion Bank branch in OttawaCHRIS WATTIE
Canada's economy will slow sharply in the second half of 2010 after roaring out of the recession, according to the Toronto-Dominion Bank .
Economists with the major commercial bank say the economy has been on a good run since last fall, with an average growth rate of 4.3 per cent. But that fast pace has ended and the current third quarter will have produced a very weak 1.5-per-cent advance.
Growth in the last three months of the year won't be much better, the economists said, at 2 per cent.
TD has also shaved half a point off next year's growth forecast, saying the economy will only get bigger by two per cent in 2011, almost a full point below the Bank of Canada's prediction.
This year's second-half estimates are also at wide variance with the Bank of Canada's last estimates of 2.8 and 3.2-per-cent increases in the final two quarters, but governor Mark Carney has recently admitted he will downgrade those projections next month.
The TD economists cite four major reasons for the dampened expectations - the weaker-than-expected U.S. recovery, the cooling Canadian housing market, tapped out consumers and the winding down of both government fiscal stimulus and the central bank's monetary stimulus.
The Bank of Canada has hiked interest rates by three quarters of a point since June, after holding the overnight rate at the hyper-low 0.25 per cent level for over a year.
Meanwhile, Finance Minister Jim Flaherty has vowed all government stimulus introduced two years ago will be terminated next spring.