Global economic recovery a 'postwar reconstruction'

Canada's new central bank chief likened the global economic recovery to a "postwar reconstruction," explaining to lawmakers on Thursday its tortoiselike pace six years after a worldwide recession.

Most advanced economies are still facing credit stresses, and central banks are keeping interest rates at record lows in order to provide stimulus, while governments are struggling to rein in debts.

"Clearly, the global economy is still in recovery," Bank of Canada Governor Stephen Poloz told a House of Commons finance committee, on his fourth day on the job.

In an opening statement Poloz forecast modest growth in the global economy this year and a "strengthening over the following two years."

But he added, "this is not a recovery in the usual sense. It's more like a postwar reconstruction. It will require sustained and focused efforts to rebuild global economic potential."

Canada weathered the meltdown better than most, but the recession still caused a "significant structural change" in its export-driven economy, Poloz noted.

"In many cases, temporary plant shutdowns were not sufficient to match the fall in demand. Some firms permanently downsized their operations. Others simply closed their doors. Large job losses resulted."

Signs of recovery in the United States and Japan as well as continued growth in emerging market economies such as China bode well for Canada.

Going forward, Poloz said, "the gathering momentum in foreign demand should help lift the confidence of Canada's exporters."