Anonymous asked in Social ScienceEconomics · 9 years ago

Canada's current economic position?

What is Canada's current economic position?

1 Answer

  • 9 years ago
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    Canada's economy has bounced back rapidly from its recession low. It managed to do so without going spending-crazy. This year’s government budget deficit (the shortfall of tax revenues against state spending) will only be about 3% of GDP. Compared with the near-double-digit deficits that seem the norm these days, that’s remarkable. Canadian GDP has rebounded so well, that it’s now 2% higher than its previous peak three years ago. Unemployment is just 7%. But Canada is more vulnerable than it may look. Despite this performance, Canada has still suffered. Its stock market has fallen almost twice as far as the US S&P 500 index this year. Canada is a major global commodity producer. So it’s unlikely to be immune to another big economic dip. Another problem is consumers are heavily indebted. The ratio of credit market debt (mortgages, consumer credit and loans) to disposable incomes is around 150%. And Canadian incomes are growing much more slowly than this debt. So there’s little scope for consumers to spend more to offset the adverse effects of weak commodity prices on the economy. All in all, the short-term outlook for Canada isn’t too bright.

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