Scotiabank: Recession for Canada, U.S.

OTTAWA, Oct. 6 (UPI) -- One of Canada's largest banks is warning its customers that recession will hit Canada and the United States, CTV News reported Monday.

The Scotiabank economic forecast seen by the broadcaster in Ottawa said the downturn is likely to last well into 2009, with the United States feeling it more acutely than Canada.

"Canada's subprime market is only (5 to 6 percent) of outstanding mortgages whereas the U.S. is over three times that amount. Canadians are also more conservative and have lower debt tolerance than the U.S., while the funding model is also completely different," the forecast says.

Apart from housing, the Scotiabank report predicted falling auto manufacturing and sales and dips in employment rates.

Peter Navarro, an economist at the University of California, Irvine, told CTV he tends to agree with the assessment for both countries.

"I see a prolonged recession given the track we're on," Navarro said. "Canada is tightly coupled to the U.S. economy, so whatever we feel here, Canada is going to feel as well."