Canada's rebound will more than double that of the United States next year - with a projected growth of 3 per cent; as opposed to 1.4 per cent south of the border, according to the bank.

It also warns that Canada's recovery is dependent on a massive government stimulus and low interest rates to support domestic activity and boost consumer spending.

"To sustain global growth, effective and resolute policy implementation remains critical," said Bank of Canada Governor Mark Carney.

But if the forecast proves to be true, Canada would be at the forefront of countries climbing out of what economists have called the worst global recession in decades.

The bank, however, says it's still worried that the U.S. and European financial sectors could have some unpleasant surprises in store that would hammer the global economy again.

Further, the higher loonie isn't helpful, due to our dependence on exports. "A stronger and more volatile Canadian dollar represents an important downside risk to output and inflation," said Carney.

The bank first hinted at a brightened economic outlook on Tuesday in a statement accompanying the decision to keep short-term interest rates unchanged until the end of June 2010, "in order to achieve the inflation target."