Looking at the leading indicators for Canada this month, it is easy to get excited about the overall positive outlook. That both Canada and the US are visibly recovering from the financial crisis is clearly illustrated by the figures, but it doesn’t mean smooth sailing through 2012 and beyond.
Limited growth following recessions can be a long-term issue as governments are not only saddled with residual costs from bailout activities, but the drop in tax revenue caused by the overall decline in business revenue can create significant government debt problems. This is what has contributed to the tripling of Ontario’s debt over the last eight years, with an even low to moderate growth of 2% unlikely to make up the needed difference in government revenues. In fact, Dr Andersen flags a 2012 fiscal crisis for Ontario stemming from its budget deficit.
Nationally, the Peter Andersen Report also indicates limited economic growth due to an expected correction to the overvaluation of the Canadian dollar, a general slowing in the world economy and soft commodity prices.
More detail is provided in the Peter Andersen Economic Report, which is distributed to TEC members by email each month.