While there are growing signs that the global economic recovery may be faltering in developed countries, the Canadian economy will stave off recession and grow modestly in the last half of 2011 according to the Organization for Economic Cooperation and Development.
According to the Paris-based think tank's latest forecast released Thursday, Canada's gross domestic product will grow by around 1.9 per cent in the third and fourth quarters of this year.
There has been speculation that the Canadian economy could slip into recession in the third quarter, after shrinking at a rate of 0.4 per cent in the April-to-June period. A recession is often defined as two or more consecutive quarters of contraction.
However, the country's troubled manufacturing industries managed to grow 2.7 per cent in July after shrinking for three months straight, according to Statistics Canada.
That news, together with strong export numbers released last week, has made it appear less likely that Canada will officially enter recession this fall.
But other members of the OECD are expected to fare less well. The American economy, for instance, could grow by as little as 0.5 per cent through the end of 2011, according to the OECD forecast.
A struggling U.S. economy could mean trouble for Canadian exporters and raise questions about whether manufacturing industries can continue to grow north of the 49th parallel.
Several high-profile plant closures continue to wrack communities in many parts of the country. Residents in Port Hawkesbury, N.S., learned in August that the local paper mill is shutting down, throwing about 1,000 of the town's 3,500 residents out of work.
And after 44 years, a Ford Motor Company factory in St. Thomas, Ont. built its last car on Thursday, leaving about 1,200 people jobless in an area already experiencing one of the highest unemployment rates in the country.
"It's like losing a family member," said one employee at the plant. "You know it's over, and it's hard."
While Canada's unemployment rate has been falling lately, the number of jobless workers across the OECD's 34 member countries has jumped substantially since the 2008 financial crisis, hitting 44 million as of mid-2011.
The worrying rise in joblessness is something that OECD secretary-general Angel Gurria highlighted during a news conference on Thursday.
"I would like to put the spotlight on two particular worrying aspects of the current situation. One is the serious threat of unemployment becoming entrenched, entrenched means long term, and the disproportionate impact of the crisis on youth unemployment," he said.
"Let me say it loud and clear: tackling high and persistent unemployment, improving job opportunities, insuring adequate social safety-nets should be at the top of the political agenda."
Bank of Montreal economist Douglas Porter said that if recession does reach Canadian shores, it will be due to an economic shock from abroad.
"My concern is not Canada," Porter said. "My concern is Europe first and the weakness in the U.S. second."
In Europe, some of the world's largest central banks said Thursday they would provide three-month U.S. dollar loans to European banks to help ease fears over a continuing sovereign debt crisis. But it remains unclear whether the Greek government in particular will be able to make its debt payments and eliminate its deficit.
Meanwhile in the U.S., the number of people applying for unemployment benefits rose by 11,000 last week and the U.S. Postal Service has announced plans to slash 35,000 jobs. Factory output also rose by only 0.5 per cent in August, down from 0.6 per cent in July.
With a report from CTV's John Vennavally-Rao and files from The Canadian Press
