Canada is facing a difficult year, but timely monetary and fiscal policy are going to help stave off the worst for markets and exchange traded funds (ETFs).

The Bank of Canada predicts that 2009 will be a difficult year, but the depreciation of the Canadian loon and quick measures should help shore up too many losses. Real gross domestic product is expected to drop 1.2% in 2009 but will rebound 3.8% in 2010, but figures are uncertain in times such as these, reports Jennifer Kwan for Reuters.

A rebound in the economy can be supported by a well-maintained financial system, a surge in external demand, and a firming of commodity prices. The Canadian economy is reliant upon exports, especially to the United States. Bank of Canada’s warning this week that one of the “main downside risks” to the Canadian economy is the impact on spending of the collapse in the U.S. housing boom; 80% of exports go to the United States, reports Canada.com staff.

The relationship between the United States and Canada explains why Obama’s first country to visit after his inauguration was Canada.

• iShares MSCI Canada (EWC): down 9.7% over three months; down 4.1% over one week

Tags: Canada, EWC, Global ETFs