Canadians may have just survived the steepest drop in quarterly economic growth in the post-war period, with mounting evidence pointing to a decline in gross domestic product that could be as high as 9%, an economist said Wednesday.

There is less than two weeks to go before the first quarter ends, and the early economic indicators have caused many economists to downgrade their economic outlooks for the period.

Wednesday, David Wolf, the Canadian economist at Merrill Lynch, outlined the most bearish forecast yet. Mr. Wolf said deteriorating conditions have led him to believe that Canada’s economy will have shrunk by a steep 9.1% in the first three months of the year. This compares with his previous forecast for a 6.5% drop.

The forecast is more than double the contraction predicted by RBC Capital Markets, which has penciled in a 4.4% decline in GDP in the quarter, and well above other predictions by TD Securities, CIBC World Markets and BMO Capital Markets, which fall closer to a 6% contraction.

These levels have been gradually lowered in the past couple of months as economists adjust their outlooks in line with recent worse-than-expected declines in employment, manufacturing sales, housing starts and exports.

Given the current forecasts, it is beginning to look increasingly likely that the economic contraction in the first quarter of this year will surpass the drop of 5.9% in the fourth quarter of 1990, which was the biggest percentage decline in GDP since modern records began in 1961.

Mr. Wolf said the downward revision reflected the faster-than-expected deterioration of the economy. He said there was four specific developments that caused him to take the outlook so low. There were: the revision in Merrill Lynch’s 2009 forecasts for a 0.5% global contraction from 0.4% growth, and a 3.1% drop in the U.S. compared with its previous prediction of 2.6%; the expectation that the U.S. dollar would buy $1.35 Canadian dollars by the end of the year compared with its prior forecast of $1.27; the extension of Canadian inventory and housing stock overhangs through the fourth quarter of 2008; and more-intense-than-expected weakness in core areas of private domestic demand.

“Our base case does not foresee Canada’s economy regaining its third quarter 2008 peak until well into 2011 — an extended period of sub-par economic performance despite the ostensible ‘recovery’ in 2010,” Mr. Wolf said.

BMO indicated Wednesday that there were also downward risks to its outlook for a 6.2% contraction in the first quarter after wholesale trade plunged 4.2% in January, its second largest decline ever.

“Canada’s outsized dependence on commodities is the economy’s other major Achilles heel in this environment,” said Douglas Porter, the deputy chief economist at BMO Capital Markets. “In Canadian dollar terms, prices are down more than 25% from the first half of last year and back to levels prevailing in 2004. Not surprisingly, this has delivered a second heavy hit to Canadian exports, with non-auto shipments in January already down almost 20% from last year’s average.”

The debate over whether the economy can recover later this year has sucked in everyone from the Prime Minister, to the International Monetary Fund to former and current Bank of Canada Governors. Prime Minister Stephen Harper has faced criticism after stating last week that Canadians will face a milder downturn and a quicker recover than most other countries.

Wednesday, Mr. Harper defended his outlook.

“It’s not rosy or unrealistic. It is very realistic,” Mr. Harper said. “But it is not negative and pessimistic and without hope and without policy.”

Mr. Harper also said Canada’s economy cannot recover from recession until the United States fixes the problems with its financial system.