While the last few monthly reports from Dr. Andersen have indicated that, overall, the domestic outlook is improving for Canada, this month’s report notes that economic challenges elsewhere in the world have significant potential to affect the speed of our recovery.
Economic growth in the US is likely to continue slowly, as stimulus programs come to an end with only a negligible contribution to economic growth, having failed to achieve the intended results. The subdued growth will also continue to result in lower-than-expected federal tax receipts, likely restricting US government funding and its ability to service debt in the long term. Canada’s close export focus on the US is therefore tying us closely to a market with limited growth potential.
Looking beyond the US for trading partnerships has its challenges as well. Recently high-growth economies such as China are experiencing a slowing of growth, driven in part by a drop in demand for their exports in traditional markets such as Western Europe. This means reduced demand for commodity inputs, a traditional stalwart of the Canadian export economy. Less demand for commodities, along with our overvalued dollar, continues to hamper Canadian exports in general.
This month’s Andersen Report analyses key domestic and external indicators and what they currently signal for the Canadian economy. (TEC members receive the Andersen report via email each month)
For further discussion on the international perspective, The Economist’s “The World Economy: Weather Report” goes into some depth, highlighting the interconnectedness of the global economy.