The Canadian Press

Government and consumer spending will help drive most of Canada’s economic growth this year, says the Conference Board’s Canadian winter outlook.

The economic think tank said Tuesday the country’s economic outlook looks much brighter today than it did a year ago, but the forecast for recovery remains muted.

“Fiscal stimulus by government is expected to bolster the economy and will compensate for soft growth in private sector investment and exports,” said Pedro Antunes, director of national and provincial forecasting for the board.

“Propped up by low borrowing rates and rising confidence, consumers will loosen their purse strings in 2010.”

Both the U.S. and Canadian economies came out of recession in the third quarter of 2009. After contracting by an estimated 2.5% last year, real gross domestic product in Canada is forecast to grow by 2.8% in 2010, the board said.

If U.S. employment improves more quickly than expected, the rebound in U.S. growth could be stronger in 2010, which would lead to a more robust recovery in Canadian exports and GDP.

While the economy will grow, job creation will not be high enough to make much of a dent in unemployment, which will average 8.6% this year. That’s a little above today’s rate, as more people re-enter the workforce to search for work.