Canadian exporters continue to struggle with a strong loonie and faltering U.S. economy, but consumers remain the driving force for national economic growth, according to the Conference Board of Canada.

The economic think-tank says the Canadian economy will expand by 2.2% in 2008, of 2.2% this year,

“Many Canadians seem undaunted by the slowdown south of the border. Canada’s domestic economy surged at the end of 2007 as consumers opened their wallets. Consumer spending has only matched this pace of growth once in the last 30 years, in the third quarter of 1985,” says Pedro Antunes, director, national and provincial forecast. “As 2008 goes on, we expect that households will continue to spend strongly this year.”

The U.S. economy declined slightly in the first quarter of 2008. Although modest growth is expected in the coming quarters, the U.S. economy will continue to be weak well into 2009. As a result of the weakness in the United States, Canada had a miserable trade performance in the fourth quarter of 2007, and the short-term outlook for exports remains grim. U.S. vehicle sales are expected to fall by over six% in the first half of 2008.

Still, Canadian consumer spending grew by an annualized rate of 7.4% in the fourth quarter of 2007. Domestic demand also benefited from strong employment growth, healthy wage gains, numerous tax cuts, high levels of business investment, and steady government spending. Consumers are also expected to spend liberally in 2008, based on steady consumer confidence, declining interest rates, and a stable housing market for both new and re-sale homes.