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The Canadian economy is recuperating, though companies will need to make capital investments and find ne markets as they emerge from the recession to a challenging new reality, the country's top central banker said Thursday. “The thaw is coming,” Bank of Canada Governor Mark Carney said in a in Winnipeg. That said, “Canadian companies are emerging from the recession to an altered world – one that may need deeper restructuring and bolder strategic initiatives than currently contemplated.” On the employment market, he noted that though the deterioration in the labour market seems to have ended, employers appear still hesitant to hire. Unemployment, which sits at 8.4 per cent, and underemployment – where employees are working part time even though they'd rather have full-time hours – remain “substantial,” he said. The economy has shed more than 300,000 jobs through the recession, and some of these positions are “unlikely to come back,” he added. The country's productivity growth declined in the recession, which is “puzzling” given that that hasn't happened in any recession of the past three decades. This may be due to restructuring capital and labour to new industries, or to the fact that companies don't fully realize the global competition they're facing. The consequences of sluggish productivity and an aging population mean the rate of potential growth for the economy will slow to about 2 per cent in the coming years rather than the 3 per cent of the first half of the past decade. “If this differential were to persist over a decade, the cumulative loss of income would be almost $30,000 for every Canadian,” Mr. Carney said.In addition global economies may have a negative impact to Canada’s growth.North American stocks began Thursday with a thud and things got steadily worse during the day, with major indexes recording their biggest one-day losses in months and falling further into the red for the year. In Canada, things were no better. The S&P/TSX composite index closed at 11,128.76, down 261.70 points, or 2.3 per cent. Concerns about budget deficits in Greece, Portugal and Spain – where the cost of insuring sovereign debt took a turn for the worse – put investors in a bad mood right from the start, and suggested that some concerns have flipped from the global economy to government balance sheets. Then, concerns slipped back to the economy after the U.S. Labour Department reported an unexpected rise in the number of initial jobless claims last week, reigniting fears that the recovery is sputtering.
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