The impending American “fiscal cliff” may be captivating the world, but according to this month’s Peter Andersen Report, it’s Canada who may have an uphill battle ahead. Serious and long-term lack of competitiveness, the U.S. energy boom, and poor export performance will continue to cause Canadian growth to suffer. This weakened economy spells trouble for Canada’s housing market, which is threatened more by a flagging job market than by the possibility of increasing interest rates.
In comparison, U.S. housing starts have hit a four-year high, suggesting that the housing economy south of the border is gaining steam. The new resolve to reach a middle ground and avoid political gridlock (and the cliff) in the U.S. will be followed by an accelerated U.S. economy; the growth rate being expected to double by 2014. Despite this, Canada can no longer rely on the U.S. as its prime export market, especially with regard to energy, and with less than 10 percent of Canadian exports directed to rapidly emerging markets such as Brazil, Korea, India and China, Canada will need to re-evaluate its export focus in order to achieve significant growth.
Further reading related to the Canadian housing market:
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