(Adds quotes, background)
By David Ljunggren and Leah Schnurr
OTTAWA, April 20 (Reuters) - It could take Canada more than
three years to recover from a shock caused by low oil prices,
Bank of Canada Governor Stephen Poloz said on Wednesday, citing
persistently negative factors in the economy.
A sharp fall in oil prices prompted the Bank of Canada to
cut interest rates twice last year in a bid to counter lower
growth and rising unemployment. Canada is a major energy
exporter.
"We estimate that it's a sort of a three-year period while
the negatives are still ongoing in the background and the
positives are emerging in the foreground," Poloz told the
Senate's banking, trade and commerce committee.
He added: "It could be longer than three years before we're
settled at that new place where the energy sector will have
shrunk relatively to the whole economy and the rest of the
economy will have grown to fill that space."
Bank of Canada deputy governor Lynn Patterson said on March
30 that the recovery would take more than two years.
In its latest quarterly forecast, the bank said on April 13
that the economy faced downside risks, including a stronger
Canadian dollar that could drag on non-commodity exports.
Poloz said Canada was still having to deal with low interest
rates, weak inflation and sub-par growth.
"There is a lot still out there that's holding things back
and the result of that is whenever we get some good news, there
are three or four reasons why it might not be for real or might
not last," he told the committee.
This economic uncertainty means many companies are reluctant
to expand production, given there is a risk they could lose
money if additional orders fail to materialize, he said.
"They need a longer period of proof that the economy is
recovering, and it will be gradual," he added.