TORONTO (AP) - Canada's central bank said Thursday the country's gross domestic product fell 7.3 percent in the first three months of 2009, dropping at the steepest pace in decades.
The Bank of Canada said that's the biggest contraction since comparable records began being kept in 1961.
Mark Carney, the head of the central bank, expects the Canadian economy will shrink by 3 percent this year as opposed to the 1.2 percent he predicted in January.
Carney blames inaction in the United States and Europe in dealing with toxic bank assets for a recession that has been deeper and longer than expected.
"If we had to boil it down to one issue, it's the slowness with which other G7 countries have dealt with the problems in their banks," Carney said. "There has not been as much progress as we had expected in January."
Canada has avoided government bailouts and has not experienced the failure of any major financial institution. There has been no crippling mortgage meltdown or banking crisis.
Canada and the U.S. have the largest trading relationship in the world, however, so the financial crisis and the global sell-off of commodities have hit Canada hard since last fall. Alberta's once-booming oil sands sector has cooled as every major company has scrapped or delayed some expansion plans.
Canada lost a record 273,300 jobs in the first three months of the year.
The Bank of Canada cut its trendsetting interest rate by a quarter point to a record-low 0.25 percent on Wednesday and took the unprecedented step of saying it will likely stay there through June 2010.
The latest interest rate cut means the bank has sliced 4.25 percentage points off the overnight rate since it began easing its policy in December 2007.
Carney is a former Goldman Sachs executive who took over the central bank's top post on Feb. 1, 2008 from David Dodge.