of that projection, we expect that the eventual u. s. recovery will be much slower than usual. for example, we project that it will take two and half years from the onset of the recession for u. s. gdp to return to its pre - recession level. this sluggishness reflects the lingering effects of the crisis on the u. s. financial system and the slow recovery of domestic consumption owing to the magnitude of wealth effects and the deterioration in the labour market. reflecting the seriousness of the shock, the global macroeconomic policy response has been unprecedented. in the wake of the intensification of the crisis, monetary policy rates have been substantially and rapidly reduced in most major economies. fiscal policy initiatives have also been robust, with the world well on its way to spending an average of more than 2 per cent of global gdp in discretionary fiscal measures. these measures will replace some of the lost private demand and – equally importantly – create a window for the necessary rebalancing of global growth. simultaneous fiscal action is not only more powerful than measures taken in isolation, but also has the potential to provide some support for commodity prices. given typical lags, the effects of these monetary and fiscal policies will be felt increasingly over the course of this year and 2010. canadian outlook – sharp recession and milder - than - usual recovery the global downturn and declining demand for our exports will make this a very difficult year for canada's economy. we are now in recession with gdp projected to fall by 1. 2 per cent this year. the first half of the year will be particularly challenging with sharp falls in activity and increases in unemployment. unfortunately, last friday's employment report is broadly consistent with our outlook. the 14 per cent drop in our terms of trade since july will translate into a significant reduction in canadian incomes and thus in our ability to sustain real domestic spending in the economy. losses by canadians on their financial holdings, either directly or via their pension funds, and concerns about the employment outlook will also restrain domestic consumption this year. uncertainty about the economic outlook and strained financial conditions should lead to declines in investment spending this year. in our base - case projection, real gdp is expected to rebound in 2010, growing by 3. 8 per cent. though seemingly impressive when viewed from the depths of a recession, such a recovery is actually more muted than usual. the recovery should be supported by : • the timeliness and scale of our monetary policy response ; • our relatively well -

. jimenez and j. witmer, “ canadian open - end mutual funds : an assessment of potential vulnerabilities, ” bank of canada financial system review ( june 2015 ) : 47 – 55. 20 a reverse mortgage lets owners borrow against their home equity, allowing them to turn it into cash without having to sell the home or making regular payments. interest accrues on the value of the loan, which is repaid in full upon the sale of the house. see www. fcacacfc. gc. ca / eng / resources / publications / mortgages / pages / understa - comprend. aspx. 21 for an example of this type of analysis, see j. schroth, “ financial crisis interventions, ” bank of canada staff working paper no. 2016 – 29 ( june 2016 ). 22 macroprudential tools are regulatory measures used to promote the safety of the entire financial system. for more on the complementarity of monetary policy and macroprudential measures, see t. lane, “ monetary policy and financial stability — looking for the right tools ” ( speech to the hec montreal, montreal, 8 february 2016 ). 23 j. l. yellen, “ the federal reserve ’ s monetary policy toolkit : past, present, and future ” ( speech to a symposium sponsored by the federal reserve bank of kansas city, jackson hole, wyoming, 26 august 2016 ). 24 s. leduc and d. wilson, “ roads to prosperity or bridges to nowhere? theory and evidence on the impact of public infrastructure investment, ” national bureau of economic research, nber working paper no. 18042 ( may 2012 ). 25 these efforts are part of the g20 ’ s “ 2 in 5 ” ambition that was adopted by the g20 in 2014. at the 2014 brisbane summit, g20 leaders endorsed the comprehensive growth strategies initiative, which was designed to lift gdp by more than 2 per cent above the baseline trajectory over the following five years. 8 / 8 bis central banker's speeches