It was thought that Canada’s economy, and related exchange traded fund (ETF), was on the way to bouncing back. However, that early optimism may be just wishful thinking.

Sheryl King, the new chief economist for Merrill Lynch Canada, estimates a 1.8% contraction for the Canadian economy in the second quarter, a 1.3% expansion in the third quarter and a 3.8% increase in the fourth quarter, reports Heather Scoffield for The Globe and Mail. She projects a a slow 1.5% crawl for the economy by the end of 2010.

The output for 2009 is calculated to be a 2.0% decline, trailed by a 2.7% expansion in 2010.

King thinks the Bank of Canada will rein in its economy-fueling measures too quickly and hinder the economy. Unemployment rate is expected to top off in a couple of months at below 9% and drop to just above 8% next year.

According to Dale Orr Economic Insight, Canada’s economy may need up till 2014 to reach 95% of pre-recession levels,  writes Jim Goddard for News1130. Traditionally, Canada’s economy only gets stronger after recessions, but it takes time to trim the fat while maintaining some flexibility.

  • iShares MSCI Canada Index (EWC): up 20.1% year-to-date


For more information on Canada, visit our Canada category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.