FILE - In this Nov. 12, 2009 file photo, a sign for TD Bank is shown in New York. TD Bank Group has agreed to buy Chrysler Financial, the automaker's old lending arm, from private equity firm Cerberus Capital Management LP for $6.3 billion. (AP Photo/Mark Lennihan, file)
June 27, 2012 - 11:15 AM
OTTAWA - TD Bank (TSX:TD) economists have joined others in downgrading their forecast for both Canadian and global growth this year and next in light of renewed fears about Europe and other economic difficulties.
The TD economists say mortgage and other credit changes recently announced by Ottawa will contribute to forces slowing Canada's recovery over the next two years.
The bank now expects growth in Canada this year will average 2.1 per cent, shaving a tenth of a point from its March forecast. And it now expects two per cent growth in 2013, down four-tenths of a point from the earlier forecast.
That is still enough to generate modest job creation and TD says the unemployment rate should decline slightly to 7.1 per cent in 2013 from the current rate of 7.3 per cent.
Chief economist Craig Alexander says tighter mortgage rules announced last week, as well as new restrictions on borrowing on the value of homes, will reduce consumer spending by about a full percentage point in 2013. The changes don't come into effect until July 9.
But he says the changes are needed for the long-term health of Canada's housing market.
Meanwhile, TD Bank said Wednesday that it remains hopeful that the European Union can right its ship, or at least keep it from sinking, in time to avert a major global shock, but also cautions that the risks are skewered to the negative.
Alexander says a European catastrophe has the potential of derailing the weak global and Canadian recoveries.
News from © The Canadian Press, 2012