of slower global and us growth, a new round of cuts to investment in canada ’ s energy sector, and a stronger canadian dollar would have meant a lower projected growth profile for the canadian economy than we had in january. i know this sounds contrary to what you have heard lately, because a range of monthly economic indicators have started the year strongly. some of this strength represents a catchup after temporary weakness in the fourth quarter, and some of it reflects temporary factors that will unwind in the second quarter. we think it is best to look through that variability, and note that the economy appears to be achieving average growth of close to 2 per cent in the first half of the year, which is encouraging. that brings me to the fourth important item that ’ s changed since january – the recent federal budget. we can ’ t be entirely certain about the full effects of the budget on the economy, as some will depend on how households react over time. but governing council judged that the budget actions will more than offset the negatives from the other three changes i just mentioned. the net effect is that our projected growth profile is generally higher than it was in january. when it comes to projecting inflation, we must consider our forecast for economic growth relative to the economy ’ s potential, or capacity. we do a fulsome review of canada ’ s economic bis central bankers ’ speeches potential at this time each year, and this was an especially important part of the governing council ’ s deliberations. that is because, as we highlighted in last october ’ s mpr, it is particularly difficult to measure capacity when an economy is undergoing a structural adjustment, as canada ’ s is. that translates into increased uncertainty around the size of the output gap and the speed at which it will close, and therefore the point at which the disinflationary pressures we see today will dissipate. specifically, the collapse in investment in the commodity sector will mean a slowdown in the economy ’ s potential growth rate. in the near term, we ’ ve lowered potential output growth from 1. 8 per cent to 1. 5 per cent. you can find details in a staff analytical note we published today. later this year, the natural sequence of higher non - resource exports and a tightening of capacity constraints should lead to higher investment and employment in the non - resource economy, and therefore growing capacity. looking beyond the projection horizon, growth in potential output overall should pick up again. this newly - added capacity may

a h e m wellink : the impact of new technologies on the implementation of monetary policy speech by dr a h e m wellink, president of the nederlandsche bank, at a symposium of the banque de france on “ new technologies and monetary policy ”, paris, 30 november 2001. * * * when thinking about new technologies, information and communications technology ( ict ) is probably the first thing that comes up in most people ’ s mind. and, there are those who see an acceleration in the diffusion of ict as being equivalent to the concept of the ‘ new economy ’. for the purposes of this conference, i would prefer to take a wider perspective, in which the new economy is seen as the interaction of several mutually reinforcing factors. these include advances in ict, financial innovation and liberalisation, the globalisation of trade, improved functioning of markets and enhanced macroeconomic management. the interplay of these factors has the potential to raise the speed limits of the economy. that is, the new economy can operate at higher growth rates than in the past without generating additional inflation. therefore, both the initial hype surrounding the new economy with some pronouncing the demise of the business cycle, as well as the elimination of the new economy all together in response to current economic circumstances, seem to be misguided. the jury is still out on the question whether we can detect a new economy in europe. without wanting to prejudge the outcome, i would argue that there is no intrinsic economic reason to expect the new economy not to materialise. so, assuming that it will take root, indeed what does this new economy imply for the monetary policymaker? i have a couple of general observations to make. first, the new economy influences the transmission of monetary impulses through the economy. it can be argued that in the new economy it will take less time for a monetary policy impulse to have an impact on inflation and output, while the impact of a given impulse will be smaller. since there is a separate panel discussion devoted to this topic, i will leave it at that and move on to the second observation. that is, policy makers do not bring about the new economy. it is the result of private sector behaviour, driven by innovative entrepeneurship or, more fashionably, ‘ creative destruction ’. policy in general can only be conducive to the new economy. in a market - based economy, private sector decisions are guided by the alloca