Canada sees recovery, sees deficit temporary

Global economic recovery may be on its way, and certainly in Canada people are loosening their purse strings again, Canadian Finance Minister Jim Flaherty said on Monday.

He also said the federal government's budget deficit now looks to be "slightly more" than C$50 billion $45 billion this fiscal year, but that most of it is one-time spending, such as stimulus initiatives and aid for the automotive industry, and not a structural shortfall.

His remarks on recovery echoed those of others who are seeing "green shoots", and he spoke of improvements in financial markets.

"The global recession began in financial markets. These positive signs in financial markets give us cause for cautious optimism that a global economic recovery may not be far behind," he told reporters.

In Canada, he said he saw some increase in demand for new housing.

"I think people are responding to the fact that mortgage rates are low," he said, noting rates are at their lowest level since World War Two.

"What I see in the Canadian economy is some indications of stabilization and some positive indications about people being willing to spend again. I know just in terms of personal household infrastructure, we have had a huge response to the home renovation tax credit. We know that it's out there working in the economy and that people are spending the money."

$1=$1.12 Canadian

Writing by Randall Palmer; editing by Peter Galloway

after giving birth at the Vancouver Aquarium. AP Photo/The Canadian Press, Darryl Dyck