TORONTO - The recession will be long and deep, with the global economy seeing "only gradual and in some cases disappointing economic recovery" in 2010, Bank of Nova Scotia economists predict.
Most developed countries will see "virtually no economic gain" until 2011 or 2012, and even then the rebound will be slow, Scotiabank chief economist Warren Jestin said Wednesday.
Jestin said Canada's economy is more resilient than that of the U.S., but declining commodity prices have hit Canada hard and likely won't bounce back for three years.
He added that no region of Canada is immune to the slowdown.
"Ontario is truly at the epicentre of the recession, but even the western provinces will be dragged down in economic decline over the next couple of quarters," Jestin said.
The bank's economic outlook is bleak, predicting that most growth in the auto industry will occur in emerging markets like China, while housing markets will take years to recover and deflation is still a risk.
Jestin predicted the Bank of Canada's trendsetting rate will dip as low as 0.5 per cent before the economy starts to recover.
He added that large federal deficits will be a reality of the recession, but Canada is well positioned to increase government spending.
"The fiscal prudence we've had in the past in this country is starting to pay dividends," Jestin said.
"In Canada we've opened up a lot of fiscal room over the last decade or so and we're able to use that fiscal room now."
Meanwhile, profits for companies on Canada's main stock index will tumble by about 32 per cent in 2009, predicted Vincent Delisle, director of portfolio strategy for Scotia Capital.
"This is much more severe than the average bear market, highlighting that this is a really challenging economic environment," said Delisle.
