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Analysts expect the Bank of Canada to remain on hold throughout this year and next as a cheap loonie helps to make Canadian exports more attractive and cushion any fallout from the debacle in the oil patch.Chris Wattie/Reuters

Maybe, just maybe, the world is doing a lot better than we thought it was.

This week will feature a Bank of Canada rate decision on Wednesday and all indications suggest the central bank will choose to sit on its hands and let its target for the key overnight interest rate remain untouched at 0.50 per cent.

The do-nothing move, after two cuts earlier this year, would reflect the largely encouraging economic numbers that have been posted in recent weeks, despite Canada's slide into a mild, technical recession during the first half of 2015.

In fact, some observers scoff at the notion that Canada is currently in any kind of downturn at all. "Let me repeat the strong conviction I've had all year throughout the debate: This. Is. Not. A. Recession," Derek Holt, vice-president of Scotia Economics, wrote in a note Friday.

Strong growth in exports as well as a hefty increase in hours worked by employees contradict the doomsayers' case, Mr. Holt asserts. Despite tumbling prices for crude and big layoffs in Alberta's oil industry, Canada will enjoy its fastest pace of job growth in three years if current trends hold up for the remainder of 2015. Given all that, Mr. Holt expects the Bank of Canada to remain on hold throughout this year and next as a cheap loonie helps to make Canadian exports more attractive and cushion any fallout from the debacle in the oil patch.

To be sure, not everyone is quite so confident. Capital Economics agrees that generally cheery numbers, including August's employment gain of 12,000, don't justify yet another rate cut from the Bank of Canada this week. But the consulting firm is not optimistic the economy can keep on churning out good news. "We still think that a third rate cut will arrive before year-end if, as we expect, the wider fallout from the oil price shock begins to undermine labour markets," economist David Madani wrote in a note Friday.

The factor that determines who's right in their outlook for the Canadian economy may lie overseas in China. Indications of slowing growth in the Asian giant have roiled markets as investors ponder what a possible hard landing might mean for the rest of the world, especially big commodity producers such as Canada and Australia.

China watchers will get plenty of new material to mull this week as the country reports trade figures and inflation readings for August. Economists expect the pace of contraction in the country's exports will abate while inflation rises to 1.9 per cent, the highest level in a year. If so, the data would signal the Chinese economy is not quite as comatose as skeptics would like to believe.

Of course, any mention of official Chinese statistics means a debate over how much that data should be trusted. Beijing insists its gross domestic product is still powering ahead at about 7 per cent a year, but the China-is-in-trouble crowd prefer to point instead at a drizzle of disappointing industrial numbers.

The country's electricity consumption, for instance, is no longer growing at the double-digit rates that used to be regarded as ho-hum and may not be growing at all. The plunging growth rate in power use would seem to signal an economy that is far worse than official figures depict.

However, foreign observers who base their negativity on such industrial gauges may not be quite as canny as they think they are. Mr. Holt of Scotia Economics points out that alternative measures of economic growth for China, using factors such as electricity consumption and rail cargo volumes, are probably even more unreliable than the official numbers.

One widely used approach, the so-called Keqiang index, indicates the Chinese economy achieved 27-per-cent growth in 2009 – which nobody believes. Such measures may have been appropriate at one time, when the Chinese economy was largely industrial, but they perform badly at assessing growth in the country's rapidly expanding services sector, where an increase in activity can occur without any large impact on electricity consumption or cargo volumes.

"Assuming that electric power growth is a good proxy for China's overall economic expansion is like trying to drive a car by looking in the rear-view mirror," writes Nicholas Lardy, a senior fellow at the Peterson Institute for International Economics.

Mr. Lardy argues that China is simply undergoing an overdue correction in its stock market. He points to strong wage growth and job creation as signs that the Chinese economy is not headed for a hard landing.

If this week's economic data buttress that viewpoint, expect markets to be in a considerably happier mood come Friday.