Can The Canadian Economy Avoid The Storm

29 June 2012 11:00 - Phoebe Robinson

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Can The Canadian Economy Avoid The Storm 

Figures for the economy’s growth in April have just been released and a gain of 0.3% was achieved by Canada. This overtook the expectations of analysts who were less optimistic as energy output rebounded after temporary shutdowns and mining companies also increased production.

These unexpected figures from April are reassuring for the Canadian economy show that the country was making decent headway into the second quarter. Since then the euro crisis has been creeping across the Atlantic and the US recovery has proved slow and prospects are not looking bright so the Canadian economy has been clouded. Never the less, the bank of Canada has already acknowledged that its forecast for 2012 is not working out the way it should be and it is looking unlikely that interest rates will be raised before next year. 

A lot of April’s increase it has been concluded has been driven by energy production and a big gain for wholesalers, with other industries seeing limited or no growth at all. For example manufactures gave results of a 0.3% drop, retail also fell 0.8% and construction declined by0.1%.

Concern has been voiced by policy makers that the global crisis could affect commodity prices even more and push them down further, which would not be great for the Canadian economy which seems to be surviving by the skin of its teeth. There are fears that the crisis will restrain profits for Canadian producers in the months ahead and this would limit the sectors ability to drive growth.

It has now been accepted by Mr Carney President of Canada after a news conference in Halifax that his original economic forecast for Canada 2012 will most probably have to be revised with the new forecasts having slightly lower predictions. Mr Carney’s forecast for the first quarter was too high he predicted a growth of 2.4% would be achieved when in fact only a growth of 1.9%.

This data has shown that the Canadian economy was in fact two per cent bigger at the start of the year in comparison with April. This has said to be another sign that Mr Carney’s estimate for a 2.5% pace in the second quarter may be too difficult to beat.

However if the European situation starts to improve then the Canadian economy may still have hope. European leaders may be finally coming together and making a decision that well benefit all economies across the world and help countries like Canada not get bogged down in what is going on across the Ocean and instead keep her economy growing and meet targets. So the fact European leaders have agreed to recapitalize banks directly instead of giving money to the bank rescue funds  is a start to the leaders coming together to try and solve the crisis which is affecting economies worldwide.


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