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Quebec economy stuck in neutral: index

No clear signs, Desjardins says. Rising energy costs seen as major concern

 

GEOFF MATTHEWS, CEP News

Published: 8 hours ago

 

Quebec's economy faces more tough sledding as U.S. export markets remain slow and the province's employment rate edges up, according to the Desjardins Leading Index (DLI) released yesterday.

After making a convincing recovery in the past few months, the index dropped to neutral in July, and "is not providing any clear sign of where Quebec's economy is headed, at least not for the time being," said a statement released by Desjardins.

 

"Our forecast scenario that calls for Quebec to barely avoid a recession still stands," the report said. "Even if real GDP growth firms up somewhat in the second half of 2008, it will only reach 0.8 per cent for 2008 overall. Nothing should be taken for granted on this front, either."

 

The DLI said rising energy costs remain a major concern for consumers despite recent declines in world oil prices. Quebec is also facing a rising unemployment rate - it climbed to 7.4 per cent in July - and a softening housing market.

The decline of the Canadian dollar to under the 95-cent (U.S.) mark will give exporters a bit of a break, the Desjardins statement said, but even at this level, the situation remains difficult.

 

"International exports of goods fell by 2.5 per cent in real terms in June," the report said. "This brings the year-to-date decline to 3.6 per cent for the first half of the year."

 

Nor can the province look forward to lower interest rates to give its economy a boost, the report says."Canada's monetary authorities are dealing with a pace of total inflation that is in excess of three per cent," the statement said. "In this type of situation, the key interest rates should remain stable in Canada for the next few months."

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