Harper stands by his vision of economic recovery in face of Dodge criticism

TORONTO - Prime Minister Stephen Harper stood his ground Wednesday on his forecast for economic recovery, despite a dire prediction by former Bank of Canada governor David Dodge that the global recession will be long and deep.

Dodge made the comments in an interview Tuesday, saying the recession likely won't end later this year and will fundamentally alter capitalism.

Speaking in Toronto, where he made a $10-million funding announcement for young entrepreneurs, Harper repeated earlier remarks that Canada was the last country to enter the global recession and is well positioned for recovery.

"It's not rosy or unrealistic -- it is very realistic, but it is not negative and pessimistic and without hope and without policy," Harper said.

Harper has boasted Ottawa will be back in surplus by 2013, but Dodge called that "totally unrealistic."

"We have never seen a period, in my time in public life, where forecasts have been so all over the map and individuals have changed their own forecasts so quickly," Harper said.

The prime minister, without specifically mentioning Dodge, denied his view of the Canadian economy is overly optimistic.

"The reality is this: things are very tough," he said. "We know that. But Canadians should not lose sight of the fact that we remain in a relatively good position compared to other countries."

Harper noted Canada has not had to subsidize its banks, has a low and stable inflation rate, and has a diverse economy that should help the country weather the storm.

Dodge said that policy-makers, especially in Canada, need to be thinking longer-term and more "sensibly" about their recovery plans. He said a quick recovery won't be achieved by simply throwing money at today's problems.

The Bank of Canada has forecast a fast turnaround for Canada, with growth resuming in the second half of this year and soaring to 3.8 per cent next year.

But current bank governor Mark Carney suggested last weekend the global economy is deteriorating faster than expected, and the next forecast in April will reflect that pessimism.