OTTAWA – Canada's grim job market will continue into next year even though the economy should begin to bounce back this autumn, Bank of Canada Governor Mark Carney says.

"2009 will be a difficult year in the Canadian job market," Carney told reporters today after releasing his latest assessment of Canada's economy.

"People are going to lose their jobs. The unemployment rate (6.6 per cent) is going to rise. And it's going to take longer to find a job. That is the unfortunate reality of a recession."

Carney said the economy will begin to lift out of the current recession in the July-through-September period, but improvements in the job market will lag behind the overall recovery.

"There will still be a certain stress in the labour market" even after business conditions start improving, he said.

"For average Canadians, they'll be seeing the effects of the recovery at the beginning of next year."

But Carney said the central bank has recognized the worsening job picture and taken that into account in its efforts to lower its trend-setting overnight interest rate — now at 1 per cent — to rekindle economic growth.

Carney also said his forecast of a rebound in the economy later this year is partially based on expectations of a large economic stimulus package in next Tuesday's federal budget.

"We do expect a substantial fiscal package in Canada," he said.

While declining to specifically discuss what might be in the budget, he suggested the Bank's forecast has factored in Prime Minister Stephen Harper's pledge to boost the economy with a package of spending and tax incentives so large that it will push Ottawa's budget deficit to the $30-billion range this year.

In its latest Monetary Policy Report, the Bank said Canada has followed other major economies into a recession and Canada's economy will contract until mid-2009. For the year as a whole, the economy will decline by 1.2 per cent.

But the economy will begin to recover in the second half of this year and will grow by an impressive 3.8 per cent in 2010.

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Besides the expected stimulus packages from federal and provincial governments, the return to economic growth will be hastened by the recent depreciation of the loonie on exchange markets, global efforts to stabilize financial markets and the Bank of Canada's efforts to spur economic activity through monetary policy.

The Bank cut its overnight rate to the current 1 per cent from 4.5 per cent in December, 2007.

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