Canada's economy is set for positive growth in the third quarter 2009, after a contraction of 3.4 per cent in the second quarter, according to an RBC Economic report.

Growth is predicted to be of two to 2.4 per cent in third and fourth quarter of 2009, and 2.6 per cent in 2010, as a result of recovery in housing market and automotive production.

"Improved financial markets, low borrowing rates and fiscal stimulus have moved Canada's economy forward," said Craig Wright, senior vice-president and chief economist, RBC. "We expect that Canada's recession will turn out to be the least severe of the past three, even after the consecutive hefty drops in GDP output from late 2008 and early 2009."

The unemployment rate is expected to rise by the end of 2009; however, it is set to drop as labour markets stabilize in early 2010. Inflation will remain under two per cent into next year.

"While the staying power of the recovery at home and abroad is still at risk, we believe the momentum is likely to build as financial markets continue to recover and stimulus spending continues to have a positive impact," added Wright.

Conversely, Canadians net worth grew $141 billion in the second quarter 2009, according to Statistics Canada. Much of the growth was attributed to the stock market and Canadians took on extra debt from April to June.

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