Canada Exceeds Economic Expectations

Canada Sees Improved Economic Forecast

First Published: February 15, 2010

While places like the United States are struggling to cope with the impact of the recession, the Canadian economy seems to be rising above the recession and moving back into the black. This is in no small part to the housing market in places like Vancouver and Toronto, which have seen record rebounds after hitting all-time lows in early-2009. As a result, Jim Flaherty, the Finance Minister of Canada, has revised the economic forecast of the country upward.

Ottawa revised its growth estimate from 2.3 percent for 2010 to 2.6 percent. That .3 percent may not seem like much, but it accounts for millions upon millions of dollars in the Canadian economy and any growth is good growth in these tough economic times. The government has also forecasted that the growth will reach 3.2 percent in 2011, before falling over the next three years to 2.6 percent by 2014.

Of course, this is all just speculation and there is no way to completely know how the economy is going to do. During the 2008 Federal Election, Prime Minister Stephen Harper stated there would be no deficit for the government if they were elected, but come March the country was running in a deficit. It is impossible to predict how the economy will do; all that can be done is to speculate.

Currently, the Canadian debt-to-GDP ratio is about 30 percent, which is the lowest in the G-7 countries, and about half of the level in the U.S. and U.K. Unemployment rate of the country is a full 1.5 percent lower than what is seen in the United States right now.

All things considered given the potential growth, the government is not stating when Canada will have a balanced budget as there are still sectors in the country struggling and the largest trading partner of the country is still running in a recession. For the next two to three years, there is really no way to know when there will be a balanced budget, even if the economy continues to grow at over two percent per year.

It is estimated that by 2015, the government’s budget should be balanced, but again there really is no way to know for certain.

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Speaking of the housing market, across the country there were major gains in January, including in Toronto where the highest-ever gains for the month of January were seen. Toronto and Vancouver, along with other places like Calgary, are bringing the housing market out of its pit falls and the surging market sales are expected to continue until June of this year. It is at this point that the Bank of Canada will increase the record low interest rate, which currently sits at .25 percent. Once this happens, the housing market will slow and many are worried that the country will go through another housing bubble as those who got mortgages when they were cheap can no longer afford them. This is just another reason why it is so hard to predict how the economy will do. Enough people not being able to pay their mortgages – thanks(!) to a higher interest rate could send everything back into a tail spin.

Canada Seeks To Expand Trade and Economic Ties With China

Canada Is China’s New Approved Tourist Destination

First Published: December 22, 2009

On December 3rd, Prime Minister Harper of Canada made his first trip to China since taking office. This is the first time that the two countries leaders have met in five years, making this visit significant to both countries. Prime Minister Harper is known for limiting his foreign travel for political purposes, but has recently become more active, visiting both China and India in order to increase diplomatic ties.

China and Canada have had some opposition in the past, stemming  from the Canadian act of giving the Dalai Lama citizenship in 2007, but those disputes have been put away as China has recently granted Canada an official travel destination. China has a very limited list of countries that are officially approved as travel destinations, with most of those being approved lying outside the North American continent. Canada’s unique status is the result of several decades of Chinese-Canadian cooperation. With a celebration of 40 years of diplomatic ties, both countries are happy to heal the rift. China and Canada both benefit from the ties, with economic and cultural exchanges between the two countries growing tremendously.

China has become a major partner in trade with Canada, and officials say that trade is likely to increase due to the strengthening of ties between the two leaders. Chinese tourists visit Canada regularly, and spend more in the country than in any other travel destination in the world. Chinese tourists also stay for longer periods of time in Canada than any other travel destination, making the diplomatic ties important to Canadian tourism. Canada expects to see greater economic returns from tourism, especially since China has now allowed tourism advertisements to be run in the country, persuading more Chinese tourists to visit Canada.

Cultural exchanges are also on the agenda for Chinese and Canadian leaders. China has expressed interest in a youth student exchange program that would allow young students to visit Canada to increase cultural awareness and build friendships between the countries. Currently, there are over 42,000 students who reside in Canada, attending university or studying. There are also well over 1 million Chinese-Canadian citizens in Canada, as well. The cultural exchanges between the two countries are just as important for building strong ties as the economic benefits, but there are also other common ties that have allowed China and Canada to work together.

China and Canada worked together to sign several different agreements, ranging from climate change to educational issues that will affect both countries. Canada has plan for opening up to six trade offices in China, a move that will further strengthen ties between the two. In addition to these agreements, China has purchased a majority stake in the Canadian oil fields, a project that has cost China over one billion US dollars. China’s increasing economic power has been seen worldwide, and Canada is among the top recipients of their buying power. China is Canada’s second largest trade partner economically, and with plans to increase cooperation and cultural exchange, Canada is sure to benefit in the future.

Rise in Consumer Confidence – a Good Sign?

Global Economy, Consumer Confidence, And Canadians

First Published: Published Date : June 11, 2009

The state of the global economy in recent times has been the number one story in newspapers and on TV news bulletins for quite some time now, and the negativity and pessimism of reports and predictions has inevitably translated to the consumers out there. In addition, the number of companies laying staff of has led to a further decrease in optimism about the economy. People are concerned about whether they will have a job next month, so concerns over having a plasma screen TV will be unlikely to feature at the top of their priorities. Since the governments of the world admitted one by one that there was a recession in the pipeline, it has been a case of bad news piling on top of bad news.

Amid all of the concerns, the mantra that has been repeated time and again is that the only way for the credit crisis to end is for customers to get out there and start shopping again in order to stimulate the economy. This has as often as not met with a hostile, cynical reaction as described in the first paragraph – if you aren’t sure about whether you will have a job next month, consumer spending becomes less of a priority for you, whatever the banks and politicians might say. The return of consumer confidence needs to be an organic thing – we as consumers need, ourselves, to feel that there is a reason to get out there and start spending. Signs are showing, now, that this might finally be the case.

Consumers surveyed in the last month have for the first time been broadly positive about the state of the economy going forward. A Harris-Decima poll conducted towards the end of May has put the level of consumer confidence among Canadians up at its highest level since February 2008 – before the credit crunch really took hold in a substantial way in terms of consumer understanding. The consumer confidence index, considered the most reliable way of monitoring confidence in the general public, is now sitting at 78.5 – up by 11.5 from the last reading in February 2009. Although this is different from saying that the consumers surveyed are all going to go out and buy expensive items, stimulating the economy massively as a result, it does indicate that people feel ready to spend, having been convinced that the wave of layoffs will not take their job and that they can look to the future with a modicum of confidence.

Among the other headlines of the survey is the fact that on being asked if they expected the economic situation to worsen in the coming twelve months, only 29% said they did, compared with nearly 60% in February. This considerable change in mindset may well be a foreshadowing of the consumer activity which will begin to ease the nation and indeed the world out of the tricky period that currently exists. There are no guarantees as to how things will be going forward, but with other indicators beginning to hint at a stabilization if not a recovery, there is at least some hope for the global economy to get back on track within the next 12 to 18 months.


Economic Crisis And Recession-Proof Jobs

First Published: March 29, 2009

In the financial climate that prevails at the moment, there are numerous people who very understandably feel that there is no way they will ever get a job. Companies are laying off workers or asking them to take fewer hours in order to allow them to keep operating, and as a result the number of companies actually taking on new staff is falling sharply. This is the human effect of the recession being shown as clear as day. Newly graduated college students are finding themselves with large scale student debt and without a job that allows them to start paying it off. People who have been in the same job for twenty years and more are all of a sudden finding themselves unemployed and with scarce opportunity to retrain and find a new job.

Despite this, there are some companies and individuals who continue to thrive even in the heart of the recession. Some jobs are seemingly fire-proof, and some companies are experiencing little, if any, fall in profits or marketability. These jobs and these companies are the ones who are recession-proof. As fanciful as that term may appear, the simple truth is that there are services that a huge number of people will continue to need, and these services are not going to suddenly hit the skids in the same way that consumer outlets have been. When people have to tighten their belts financially, the first things to go are the things that they want but do not need. The things that we need will continue to do well because, whether we like it or not, we have to pay out for them.

For example, health care professionals are not suffering unduly in the recession because – credit crunch or no credit crunch – people are still getting sick, getting injured and needing treatment. Although there may be a drop in terms of people with comprehensive medical insurance as workers get laid off, there is no question that people are still going to their doctors in cases of necessity. Just as they will go to the doctor to get themselves fixed, they will also see another recession-proof worker – the car mechanic – when their car breaks down to get that fixed. Living without a motor vehicle, for many people, is simply not something that they can countenance.

The key, then, to making yourself recession proof is not easy, but it is clear. Make yourself indispensable. If you can get yourself into a market sector on which people rely and on which they will spend money, then you will give yourself a big advantage in the credit crunch era. If you are looking to go into business, then yes, now is a risky time for that but if you can get a business plan going for something that is essential it will pay off. Think about what people turn to in times of financial difficulty, and try to make your mark in those areas. It is essential to protect yourself, because the recession may continue for some time.

Positive Signs In Canadian Economy – But A Long Way Still To Go

Financial Crisis and Canadian Economy

First Published: April 1, 2009

As people hang on for news that the financial world is lifting itself from its sickbed and preparing to walk again, any little bit of good news is likely to be taken as an encouraging sign that the end may be in sight. There are timely warnings, then, attached to the news that Toronto and Ontario have both reported rises in the rate of inflation for February. As both cities saw a rise of 0.1% from January’s rates, and Canada in general leaped by 0.3%, and the stock market rose for an eighth consecutive day, there may well be some desire to crack open a bottle of moderately-priced champagne – but this should be initially resisted, say experts. The inflation rate is predicted to fall in the coming months as more factors come into play.

The markets and the prices will continue to be watched in the months to come, as the world watches America for signs that things are improving there. Like the British government a few weeks ago, the US administration has taken its first steps toward quantitative easing by announcing a plan to buy up US$300bn in treasury bills. The danger inherent in this is that it can cause inflation to rise too quickly, and the Canadian government is expected to hold off on any quantitative easing at least for the present, preferring to keep a close eye on the economy and put in place prudent measures such as purchasing commercial paper in a bit to stimulate business lending.

While any signs of stirring in the economy are certainly to be welcomed, the fact of the matter is that nothing can presently be said to be happening that is a definitive “beginning of the end” of the financial turmoil, even in a Canada that has been applauded for its sound handling of the crisis. As a newly-installed President is finding out south of the border, people are tending to be skeptical of any financial stimulus plans, preferring to wait until the evidence of their own eyes gives them permission to get excited. The overall message is still that this is not a crisis which will recede overnight, and that we may well be looking at something that takes years to finally be over.

For the present, it seems that all that the consumer can to is continue to spend wisely, save assiduously and wait things out. The thing that is sticking in everyone’s mind, no matter which nation they live in, is that nobody can really say they have a definitive way to cure the crisis. If they did, it would already be in place. Patience is going to be the key, in Canada as much as everywhere else, and this is one case where no-one can predict with absolute certainty what will happen tomorrow, next week or next month. Amid all that, who’d be a President?