Unfavourable structural forces in Europe have put a question mark over the global expansion, but we doubt the headwinds will be strong enough to derail growth in other regions of the world. We are revising down our outlook for Europe in 2010 but maintaining our forecast of global growth in excess of 4%.
The real economies of the U.S. and Europe are not tightly linked, and the adjustment mechanisms of the U.S. economy are more robust than Europe’s because its labour market is more flexible. If Europe poses a risk to the U.S., it will be through financial and credit markets. At this writing, however, U.S. financial conditions have on the whole suffered very little.
The Canadian private sector added a record 108,000 jobs in April. As with the U.S., we are maintaining our growth forecast in 2010, with worries about Europe countered by the vigour of the labour market, but are keeping close tabs on the risk of financial contagion.
