Finance Minister Foresees More Canadians Losing Their Jobs Next Year

November 28, 2008 12:53 p.m. EST

Ottawa, Ontario (AHN) - As Ottawa enters into a technical recession in 2009, more Canadian workers will lose their jobs and raise the country's unemployment rate to 6.9 percent, Finance Minister Jim Flaherty said Thursday at his mid-year economic update.

For the fourth quarter of 2008, Flaherty forecasts the country's gross domestic product to contract by 1 percent. For the first quarter of 2009, Canada's economy will further slow down by 0.4 percent and finally manage to grow by 0.3 percent at the end of 2009.

The projected 6.9 percent joblessness rate is still better compared to the 1980s when Canada's unemployment rate peaked at 13 percent and then went down to 10 percent in 1991 to 1993.

While BMO Capital Markets economist Douglas Porter finds Flaherty's economic forecast reasonable, Porter has a different prognosis when it comes to the unemployment picture. He has a bleaker outlook as he foresees unemployment will likely go up to 7.5 percent by end of 2009 with 50,000 jobs lost by next year.

To boost Canada's economy, the finance minister proposed on Monday to hike infrastructure spending.