OTTAWA, Sept. 16 (Xinhua) -- Conservative leader Stephen Harper admitted Tuesday that there are problems with the Canadian economy but said he is optimistic about the economic outlook.

    "At the moment there are problems in the Canadian economy, but we aren't in a recession," Harper told reporters during an election campaign stop in the eastern province of Ontario.

    "We have a slowdown economically, but personal income growth continues. There are jobs, but there are job losses, but more gains.

    "The reality is that we are managing the economy and are living through this period of time, and we are managing it much better than any other industrialized country," he said, referring to his former Conservative government.

    The Canadian S&P/TSX index dropped by more than 200 points in early Tuesday trading a day after a 500-point plummet. The dramatic decline was sparked by investors bailing out after major U.S. investment bank Lehman Brothers filed for bankruptcy protection and Merrill Lynch agreed to a takeover worth 50 billion U.S. dollars by Bank of America.

    Opposition parties have lambasted the Conservatives over Canada's beleaguered manufacturing sector, which has suffered massive job losses while the country's economic growth has dwindled to one of the lowest rates among the G8 nations.

    But Harper has struck back at his opponents' spending proposals ahead of the Oct. 14 federal election, saying they are risky and unaffordable.