OTTAWA — Canada is well positioned to avoid an economic downturn despite financial woes in Europe and the United States, Finance Minister Jim Flaherty said during an appearance on CTV's Question Period on Sunday.

When asked by co-host Craig Oliver why Canada might escape a possible recession, Flaherty replied, "What we're seeing in the globe is a reduction in economic growth but there's still overall growth due to the emerging economies. … Relatively speaking, in the advanced economies, we're doing well."

The finance minister said positive economic forecasts for Canada have been made by the International Monetary Fund, the Organization for Economic Co-operation and Development and many private sector economists.

"Their consensus (is) that we'll continue to see overall modest growth in Canada for the rest of this year and into next year," Flaherty said.

He also said the government is prepared to take action should the economy be hit by "a dramatic shock, if we have a credit crisis like we had a few years ago."

On the question of whether Canada can still eliminate its deficit within the next three years, the minister said the government is on track to accomplish that.

"We intend to save $4 billion over the course of the next several years and that's doable out of a budget of $265 billion," he said. "But we need to be frugal and we know what the consequence is of countries that run into big deficit and big debt."