The Globe and Mail reports in its Friday edition that former Bank of Canada governor Mark Carney says Canada is heading toward a recession and that fiscal discipline will be "imperative" as policy makers enter a period of challenging trade-offs between promoting economic growth and taming inflation. The Globe's Mark Rendell writes that Mr. Carney told the Senate Committee on Banking, Commerce and the Economy on Thursday that in the near term, rising interest rates and slowing global economies make "a few quarters of negative growth in Canada" likely. Looking ahead, he said the world economy is entering an era that will be defined by higher interest rates, more persistent inflation and greater volatility in financial markets. That means higher borrowing costs and less available capital for businesses, as well as trickier policy choices for governments and central bankers. Mr. Carney said: "Sound money and credible fiscal policy will be rewarded. But mistakes will be punished and no one's really going to be exempt." Mr. Carney joins a growing number of private-sector forecasters, such as economists at the Royal Bank of Canada, Bank of Montreal and Bank of Nova Scotia -- who predict a downturn in Canada next year.
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