CANADA: OK NOW, NOT LATER?

There are now calls from the OCED, the IMF, and the ECB for more government fiscal stimulus, as the monetary fixes are reaching their limits.

For example, in Canada, they lost some 1,800 jobs in October. The loss was offset by the government taking taxpayer money to create public sector jobs, which will cost in benefits including pensions and healthcare. Overall, it will increase government debt but do nothing to increase productivity and strengthen economic fundamentals.

Due to a decline in exports and business investment, growth is tracking close to 1.3 percent, after a 3.7 percent annualized growth in the second quarter. Yet, for all of 2019, Canada’s GDP is estimated to grow only 1.5 percent.

TREND FORECAST: Carolyn Wilkins, Senior Deputy Governor of the Bank of Canada, warned of the global financial instability that could infect Canada: “With storm clouds gathering, we can’t let our guard down.”

While Canada’s central bank has kept interest rates at 1.75 percent since 2018, after raising it five times during a 16-month interval, we forecast that as the global economy slows, they, too, will bring interest rates down to the zero to negative range.