A recovery from the current global economic downturn is not likely to begin until late 2009 or 2010, and will be very slow-paced, bank economists said on Wednesday.

“The pace of recovery is likely to be very slow,” Warren Jestin, senior vp and chief economist at Bank of Nova Scotia, speaking at the annual general meeting for the Investment Counsel Association of Canada in Toronto. He noted that many analysts are predicting that the widespread market turmoil will last until 2010.

Demand in the United States is unlikely to recover in the near term regardless of how much money the government pumps into the system since banks are no longer willing to lend to the huge number of “marginal borrowers” who have fuelled such rapid growth in the past 10 to 15 years, Jestin said.

“What we have taken is a good chunk of the borrowing population in the U.S. out of the market entirely, in the deleveraging process,” he said.

The recovery will be particularly long-lived due to the structural nature of the problem, Jestin added. “We are going to change the way the financial system operates, and structural adjustments take time.”

Don Drummond, senior vp and chief economist at TD Bank Financial Group, unveiled two potential scenarios for growth in 2009, one slightly more pessimistic than the other. He said global growth would be 2% in 2009, but warned it could fall below 1% if demand continues to fall. Global growth has been 5% in the past four years, and anything below 3% growth at the global level is considered a worldwide recession, he said.

In Canada, TD Bank’s more optimistic forecast includes no growth in 2009, and could be as low as a 1% decline.

This will be primarily driven by continued declines in commodity prices that will hamper the Canadian economy, Drummond said. He expects commodity prices to fall another 10%, where they will hit a trough in early 2009. At the trough, oil will hit roughly US$45 a barrel, he said.

Commodity prices — specifically agricultural, metal and mineral prices — will then rebound 35% to 40% throughout the remainder of 2009 and 2010, Drummond said. By the end of 2010, he expects the price of oil to be roughly US$75 a barrel.

Until commodity prices rebound, the Canadian dollar is unlikely to rise above its current level, the economists said. It will not likely reach parity with the U.S. greenback until 2010, according to Jestin.

The companies that remain strong through the market turmoil will be those with strong balance sheets and conservative management, Jestin said, adding that companies should not yet be levering up to take opportunities in the current economic environment.

“We’re in the middle of a game here, and there’s a lot of adjustment to go,” he said.

The economists warned financial professionals that in the short-term, it will be a tough market in which to make money on investments. Rather than seeking growth stories, Jestin recommends seeking companies with strong balance sheets, dividends, and strong customer loyalty.