UPDATE 1-Canada's Flaherty sees no recession this year

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OTTAWA Aug 15 (Reuters) - Canadian Finance Minister Jim Flaherty said he expects solid economic growth this year, despite signs the country was on the brink of a recession in the first half.

In an interview with Business News Network television in Toronto, Flaherty was asked if he expected the economy to slip into an official recession as of the second quarter.

"I don't anticipate that over the course of the year that that will be the situation," he answered.

"I anticipate that over the course of the year we will have positive economic growth."

The economy contracted in the first quarter. It rebounded in April but shrank again in May by 0.1 percent. Second-quarter gross domestic product numbers will be released on Aug. 29.

A recession is technically defined as two consecutive quarters of contraction.

Flaherty downplayed the most recent data showing a downturn in growth, as well as heavy job losses and a sharp drop in housing starts.

"I think we're doing well in terms of our anticipated growth this year. We're on track budget-wise, we continue to run a surplus. The revenue figures are adequate and we watch all of this very carefully," he said.

He said he was relieved by the recent easing of oil prices and the drop in the value of the Canadian dollar versus the greenback.

"There were some significant concerns about inflationary pressures. I take some comfort from the softening in oil prices," he said.

"There's also been some softening in terms of the Canadian dollar vis-a-vis the U.S. This may be of some assistance to the manufacturing sector in Central Canada."

Flaherty is working on the Finance Department's annual fall economic update, which has sometimes in the past included tax cuts or other fiscal measures.

No date has been set for its release but Flaherty suggested most of the tax-cutting action aimed at stimulating economic growth was already taken in 2007, and that 2008 will be about "staying the course". (Reporting by Louise Egan; editing by Rob Wilson)