European crisis will cost Canada’s economy $10-billion in 2012

OTTAWA – The Canadian economy is going to take a huge hit thanks to the European crisis. Bank of Canada governor Mark Carney issued the warning, Wednesday.

The central bank expects the impact hold back the Canadian economy’s growth by about 0.6 per cent this year, equivalent to about $10-billion.

The global economy will see a one percent drop in output.

“The banks overall out look for the Canadian economy has little change from October. While there was more momentum than anticipated in the second half of last year, the pace of growth going forward is expected to be more modest than previously envisioned, largely due to the external environment,” said Carney.

He added that the euro crisis is the biggest enemy to the Canadian economy right now

“The sovereign debt crisis in Europe has intensified, conditions in international financial markets have tightened and risk aversion has risen. The recession in Europe is now expected to be deeper and longer than previously anticipated.”

The bank announced Tuesday that Canada’s economy will likely grow by two per cent in 2012.

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