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Prime Minister Stephen Harper stood by his positive economic outlook on Wednesday, despite comments from former Bank of Canada governor David Dodge that the global economy will remain mired in a long and deep recession.

Speaking to reporters in Toronto on Wednesday, Harper reiterated his position that Canada was the last country to enter the global recession and would be one of the first to emerge from the crisis.

"This country has a strong, long-term balance sheet," Harper said. "We will return to surplus when there is a recovery - no other country is in that position. We have the best fiscal position."

Harper pointed to Canada's "low and stable inflation" rates, strong banking system, diverse economy and skilled labour force as indicators that his economic outlook is not unrealistic.

"It's not rosy or unrealistic. It is very realistic," Harper said. "But it is not negative and pessimistic and without hope and without policy."

In an interview with the Globe and Mail, Dodge said Tuesday that the Canadian economy will take longer to recover than Harper and others have predicted.

Recovery "is not going to be as quick as everybody thinks," Dodge said. "I think anybody would be dreaming in Technicolor to think that you're going to get through this by the third quarter of this year."

Earlier this year, current Bank of Canada Governor Mark Carney forecasted a quick recovery for the nation's economy.

He said Canada's economy would return to a period of growth in the second half of 2009 and grow by 3.8 per cent in 2010.

However, Carney has indicated that he will revise those predictions in his April Monetary Policy Report.

For his part, Harper has predicted that Canada will be posting budget surpluses again in 2013, a goal Dodge called "totally unrealistic."

Liberal finance critic John McCallum said Wednesday that the prime minister's comments show "that Stephen Harper is entirely out of touch with the reality of this crisis that Canada is currently facing."

In an interview with Â鶹ӰÊÓnet, McCallum said that not only has Dodge predicted a long recession and Carney has indicated he will revise his economic outlook, but he also pointed out that the International Monetary Fund says Canada's economy will worsen before it gets better.

"We have to be realistic with Canadians," McCallum said. "We don't want to be unrealistically pessimistic, like when Stephen Harper speculated about Depression a couple of months ago. But neither do we want to be Pollyannas, pretending that things are much better than they really are."

When clarifying his comments during an interview on Â鶹ӰÊÓnet Wednesday afternoon, Dodge said that most economists predicted that 2009 was "going to be a pretty grim year."

He predicted that the Canadian economy will likely hit rock bottom by the end of this year, but because the world economy is likely to recover more slowly than previously anticipated, the Canadian economy will follow suit.

"Relatively speaking, we are in better shape than much of the rest of the world, that's for sure," Dodge said. "But we do rely on demand for our products coming from outside our borders. Not just the United States, but around the world. And the rest of the world, including the United States, is probably not going to recover as quickly coming out of this recession as it did coming out of 1982 or coming out of 1990-91."

In his Globe interview, Dodge predicted that several Canadian industries would experience permanent contraction, including the auto and newsprint sectors.

He also predicted that unemployment would rise above 10 per cent.

However, despite his aversion to running deficits when he was deputy finance minister under Paul Martin in the 1990s, Dodge said running deficits for a few years to help dig the country out of recession is acceptable, so long as the money is spent wisely.

He pointed to infrastructure and boosting IT services in the health-care industry as two types of projects that could yield the more desirable long-term economic benefits, rather than short-term gains that will do little for economic recovery.

"We're thinking of it as stimulus, somehow, as a bridging exercise, instead of recognizing that it will be a somewhat longer period of recovery and that we really need to do some of these things to augment our productivity down the line," Dodge said.

Dodge also recommended a slight boost in taxes to boost government coffers, such as a one per cent hike in the GST.

"A little bit of tax here and there would do it," Dodge said.