Canadian economy rebuilding, though headwinds remain,
says (BOC) Governor Poloz
Some key points from his speech yesterday to the Greater Charlottetown Area Chamber of Commerce:
"The Confederation Bridge has simplified the trip since it first opened. If you come to the Island by car, you don’t have to navigate the waters of the Northumberland Strait. According to the Canadian Encyclopedia, the shallow waters of the strait are susceptible to strong currents, tides and turbulence. Even the most skilled sailor can find it challenging to read the winds and waves, and to judge all the cross-currents.
If only the Canadian economy had a similar bridge. We’ve been on a voyage of rebuilding since the Great Recession. But the trip has been longer and more complicated than previous recoveries because of all the cross-currents acting on the economy. Not only are the headwinds of the global financial crisis still blowing, but now we’re also dealing with lower prices for oil and other key commodities, which previously were a key growth engine for us. The implications for income and investment, and the adjustments they’re causing across sectors and regions, may take years to work themselves out."
(more at the link below)
- Canadian economy is once again on a course toward balanced sustainable growth.
- However, there continue to be headwinds.
- Led by non-energy exports (which are benefiting from a weaker C$) and stronger US demand.
- There are signs of a recovery in the creation of new export companies.
- Despite the uncertainties surrounding the oil price shock, the impact has occurred more quickly than expected, but has not been larger.
- The underlying trend of inflation is somewhere 1.6 to 1.8%.
- Expect the Canadian economy to reach full capacity by the end of 2016.
In a nutshell:
- No surprise: The BOC continues to count on the future strength of the US economy to carry the Canadian Economy.
- We will have to watch developments in the US to get a sense of what to expect for Canada.
- We will also have to continue to watch the C$ performance vs the US$ (see last Fridays blog).
- Oil prices are a "wild card".
Latest US Economic data:
Yesterday: Housing Starts showed some improvement after a difficult winter:
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