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Breathe in. Breathe out.

Doesn't that feel better?

China's economy is not imploding. The world is not engulfed in a 2008-style crisis. And Canada is not a failed petrostate.

You might be forgiven for thinking otherwise amid the overwhelming sense of doom gripping financial markets of late.

It's worth remembering that the stock market and the economy are not the same thing. Yes, stocks can be a predictor of economic shifts, but they're not an ideal leading indicator. Nor is the Canadian dollar, for that matter.

The world is experiencing a significant correction in asset prices – in stocks, oil, copper, potash and many other resource-based commodities. It's now clear many of these goods were badly overpriced and due for a reality check.

But a correction does not equal a global recession.

Here's what we do know. Last year was unambiguously bad for the Canadian economy. A collapse in the price of oil took a massive bite out of the value of the country's exports. Bank of Canada Governor Stephen Poloz has estimated the hit to national income from the lower commodity prices at $50-billion a year, or $1,500 out of the pocket of every Canadian. The economy shrank in the first half of 2015 and, according to the central bank, came close again in the fourth quarter, posting expected growth of just 0.3 per cent.

There has been some spillover from the oil patch to the much larger non-resource side of the economy. Plans by businesses to invest and hire are weaker than they've been since recession, according to the Bank of Canada's closely watched business outlook survey.

But the way ahead looks better, not worse. Outside the energy sector, the economy continues to generate jobs. And the unemployment rate, at 7.1 per cent, is only a percentage-point above where it was before recession. Fresh data showed strong retail sales and factory output in November, along with tame overall inflation in December, in spite of a spike in food prices.

This all suggests the non-resource economy, which makes up 84 per cent of Canada's gross domestic product, is growing, albeit modestly.

Going forward, the main source of strength for the Canadian economy is likely to be the United States, which, in spite of some hiccups, is growing at nearly twice the pace here. As CIBC economist Andrew Grantham put it: "There are reasons to be concerned about the global economy at the moment, but the U.S. outlook isn't one of them."

Once Canadian manufacturers and exporters feel more confident that the dollar has stabilized at current levels and the global economy isn't tanking, they may be more willing to take advantage of their new-found pricing advantage, particularly in the United States.

Help is on the way for Canada's business sector. The federal government is poised to inject nearly $10-billion a year worth of fiscal stimulus – through tax cuts and infrastructure spending – this year and next. That, combined with still-low interest rates and a weaker currency, provides the foundation for future growth.

And for all the angst about the state of the global economy, the International Monetary Fund is projecting accelerating GDP growth of 3.4 per cent in 2016 and 3.6 per cent in 2017. If the forecast is accurate, that's a modest downgrade, not a global recession.

China, meanwhile, is headed for slower, but more sustainable growth. The IMF is forecasting still-impressive growth of 6.3 per cent this year, down from 6.9 per cent in 2015. And China will continue to be a source of strength for the global economy, not an anchor.

The greatest danger is that the stock-market volatility emerging from China infects markets here.

Investors would be wise to look beyond the gloom and doom at the economic fundamentals, which are not nearly as grim as advertised.

By the end of last week, a more rational attitude seemed to be taking hold in financial markets. The dollar, the price of oil and stocks all rebounded strongly.

And for that, we can all breath a sigh of relief.

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