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RE: Canada watch out
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Why Canada Is Leading Developed Countries In Economic Recovery
Ample resources, minimal public debt and a solid financial system make Canada a paradigm of sound economic practice. All this has helped Canada post the strongest GDP performance …
By NuWire
July 21, 2010
4 7957 0
Ample resources, minimal public debt and a solid financial system make Canada a paradigm of sound economic practice. All this has helped Canada post the strongest GDP performance in the developed world. While a US slump inevitably impacts trade for its neighbor to the north, employment in Canada is nearly back to pre-recession levels, proof of its resilient economy. See the following article from Money Morning for more on this.
![filekey=|7467| align=|right| caption=|Vancouver, Canada| alt=|Vancouver Canada|]Canada’s economy has consistently outperformed that of the United States since the beginning of the financial crisis. And while it’s showing signs of slowing down, Canada’s pending decline will be far shallower than that of the United States, and its rebound more dynamic.
Canada’s gross domestic product (GDP) expanded by 6.1% in the first quarter of the year – the highest rate of growth among developed nations – and the country is expected to lead Group Seven (G7) nations in economic growth for at least the next two years.
The reasons are many:
Canada’s banking system is sound.
It has a generous bounty of resources.
Its economy is more service-based than it’s been in years past.
Corporate interests have less influence over government policy.
And it has far less government debt.
“Suddenly, Canada is being held up as a shining light of sobriety, daring, common sense, and strong returns,” says Money Morning Contributing Writer Jon D. Markman. “It largely sidestepped the entire global financial crisis of the past four years because its highly regulated banks were prohibited from securitizing mortgage debt to the extent that was widely practiced in the United States. Its banks also were banned from taking on high levels of leverage to make larger and riskier loans.”
Already, Canada has recouped 403,000 jobs, or 97% of those lost in the recession. Employment rose by 93,200 in June – a number five-times greater than economists had expected – following a gain of 24,700 in May and a record-high surge of 108,700 in April.
By comparison, the United States, which has a population 10-times larger than Canada’s, only added 83,000 jobs in June. And if you factor in the loss of 225,000 temporary Census jobs, the United States actually lost 125,000 jobs. Worse, if you include “discouraged workers” who haven’t looked for a job in the past four weeks, the U.S. labor force has shrunk by 974,000 in the past two months alone.
Canada’s unemployment rate slid to 7.9% in June compared to 9.5% in the United States.
“Businesses are confident in our recovery and are hiring,” Benjamin Reitzes, an economist at BMO Capital Markets told Bloomberg. “That should get the ball rolling on growth from a private sector perspective.”
Indeed, Canada has already begun the process of reigning in its stimulus measures. The Bank of Canada (BOC) yesterday (Tuesday) raised its key interest rate a quarter of a point to 0.75%. That was the second such high in as many months.