VERICO economist Michael Campbell gives us an overview into the current state of the Canadian economy and what you should be aware of.
After continually underestimating the impact of falling resource prices – especially oil, the Bank of Canada has come to realize that this is a major restructuring of the economy that it estimates can take up to 5 years and remove $50 billion a year out of the economy annually.
But please understand that the economic problems are focused in Alberta, Saskatchewan and Newfoundland – the economy outside resources is still moving along.
The big economic hope on the short term rests on a falling loonie that represents a de facto 40% plus pay cut for Canadians over the last 2 ½ years. Given that 75% of our exports go to the States, exporters will be thrilled with the lower dollar.
We’re also looking for a big year in tourism thanks to the low dollar. The drop in the loonie has already spurred a 21% increase in same day visit from the US in the first 10 months of 2015 while same day visits to the States by Canadians dropped 9.3%, which is good news for retail.
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