Canadian economic overview - March 30, 2006

In the first half of the year, the underlying economic trend in Canada remains strong. High commodity prices continue to be the principal driving force of the Canadian economy. Copper and zinc are sold at the highest price level ever; gold and aluminum remain a strong as well. Crude oil prices close to peak level round up this picture very nicely. In contrast, automobile sales fell slightly in January. GDP: The growth rate for December 2005 was revised slightly up to 2.5% annualized, however, it did not change the overall growth for 2005 of 2.9 %. Composite Index of Leading Economic Indicators: + 0.2% in February, slightly down from the + 0.3% in January and + 0.4% in December 2005. Unemployment: 6.4% in February compared to 7.0% in February of last year. Producer Prices: Up 2.2% in January compared to the same month last year. Trade Balance: + $57.8 billion in January (latest 12 months). Housing Starts: Aided by the unusually mild winter of 2006 in North America, 248'000 new constructions were started in January; 241'000 in February. Special Focus: Canada's huge reserves of heavy tar and sand oil has been reported. The ever-rising oil prices make it more and more economical to extract this oil grade from the sands of Western Canada. New studies just published show that if heavy crude is added to the conventional oil, Canada has the third largest reserves in the world (174.1 billion barrels), just behind Venezuela and Saudi Arabia. Based on conventional crude alone, Canada drops to number 22 (4.7 billion barrels).