In the first half of the year, available economic information was broadly in line with the Bank’s expectations. By midsummer, however, evidence began to accumulate that the recovery in U.S. investment—a key factor in the expected pickup in growth in the second half of 2001—would be delayed and that the slowdown in that country would be deeper and last longer than anticipated.
Economic activity outside North America had also begun to show more clearly the effects of weaker U.S. growth and of the ongoing global retrenchment in the information and telecommunications sectors. In Canada too, there were signs that domestic demand, which had held up through the first part of 2001, was softening and that the inventory adjustment was not as well advanced as expected.