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Mark Carney is under increased pressure as European and U.S. fiscal policy pushes up the loonie’s value.Reuters

The Canadian economy is slowing – a reality that's likely to be on full display when gross domestic product for July comes out Friday.

We already know that in July the trade deficit widened, factory sales fell and the economy lost more than 30,000 jobs. The economy will be hard-pressed to show any growth at all in the month.

But the greater concern isn't about July. It's about the health of the Canadian economy in the second half and beyond.

There isn't much driving growth. The global economy is slowing, consumers are tapped out, debt levels are high, a housing slump appears likely and the high dollar is choking both exports and manufacturing activity.

Paul Ashworth of Capital Economics estimates that GDP growth could fall to an annual rate of just 1 per cent in the third quarter.

In a quarterly forecast, the Toronto-Dominion Bank says the economy is "stuck in a soft patch" and will be held to a "meek" annual growth rate of less than 2 per cent until next year.

With the economy stalling, many economists wonder how long Bank of Canada Governor Mark Carney will stick to his vow to raise interest rates.

Mr. Carney, who is slated to speak at a conference in Ottawa Monday, is in a tight spot. Both the U.S. Federal Reserve and the European Central Bank are actively buying up bonds to keep their economies flush with cash.

That's pushing up the value of the Canadian dollar because investors now expect interest rates here to stay higher and rise faster than elsewhere. A higher dollar, in turn, weakens Canada's export-dependent economy.

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