* Canada says Europe is key risk, hurting global economy
* Flaherty: GDP data shows Canadian economy growing
TORONTO Aug 31 The global economic situation is
fragile and problems in Europe and other parts of the world
could hit Canadian growth, Finance Minister Jim Flaherty said on
Flaherty said the key risk remained the debt crisis in
Europe and also cited the sluggish U.S. recovery.
"Further slowing of the global economic situation can be
expected to have an impact on Canada," he told reporters, saying
the uncertain global conditions meant there were downside risks
to economic forecasts the government made in its March budget.
Flaherty, a long-time critic of what he sees as Europe's
reluctance to deal with its problems, said he talked to his
European counterparts this week and they had expressed optimism
about dealing with the crisis later this year.
"I'll believe it when I see it, because this has been going
on for a long time," he added.
"(The European crisis) is affecting the level of economic
growth in the emerging economies including China ... this is a
drag on the world economy," he said.
Flaherty said second-quarter gross domestic product data
released earlier in the day showed Canada was continuing to show
growth. The Canadian economy grew at an annualized 1.8 percent
in the quarter, slightly exceeding market expectations.