The economic slowdown in Canada has — at least so far — been less severe than the crushing financial troubles that have weakened the U.S. economy.

However, Canada’s economy is tightly linked to that of its south-of-the-border neighbor, as today’s Globe and Mail reports:

The success of the new U.S. stimulus package in stabilizing financial markets is crucial for Canada’s economic recovery, Bank of Canada Governor Mark Carney says.

In comments to the House of Commons Finance Committee on Tuesday, Mr. Carney defended his controversial projections for 3.8-per-cent growth in Canada’s economy next year. But he warned that the financial-markets aid package being introduced by Washington to mobilize more than $1-trillion (U.S.) needs to work in order for the Canadian projections to materialize.

The good news is:

(Mr. Carney) said Canada has many things going for it, allowing a quicker recovery here. Mr. Carney pointed to Canada’s hefty interest rate cuts, the well-functioning banking system, the depreciation of the loonie, fiscal stimulus, a recovery in emerging markets that lifts commodity prices, and solid balance sheets among Canadian households and businesses.

Photo ©Alan Albert