Canada undergoing temporary growth spurt: central bank

OTTAWA – The Bank of Canada said the economy likely grew by a robust 4.2 per cent in the first three months of 2011, but is already braking sharply.

The central bank said the current second quarter ending June 30 will see growth slow to two per cent, in part because of supply disruptions in the aftermath of the natural disasters in Japan.

But the disruptions will be temporary, the bank said, and the economy should pick up momentum to 2.7 per cent in the third and fourth quarters.

On Tuesday, the bank revised its growth forecast for the full year upwards by half a point to 2.9 per cent, but most of the improvement was due stronger than expected exports and consumer spending, which it said were temporary factors.

Meanwhile, the bank said exports will come under increasing pressure going forward due to the strong Canadian dollar.

It forecasts that economic growth will moderate to 2.6 per cent in 2012 and 2.1 per cent in 2013.

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