Global Economies Struggle With Recovery

24 July 2012 12:00 - Lucy Williams

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Global Economies Struggle With Recovery

Bank of Canada governor Mark Carney, US Federal Reserve chairman Ben Bernanke and the International Monetary Fund (IMF) are all in agreement over the recovery of global economies, including the Canadian economy, which is currently painfully slow with full employment not likely in the near future.

The Canadian economy is however looking strong especially compared to the weakened economies of the Eurozone. Recent reports have shown that European economies are now expected to be in recession for the remainder of the year, potentially affecting the recovery of economies around the world.

Economic growth in Canada began rising in the immediate years after the global economic crisis of 2008 however in recent years output has contracted down to 2.4 percent in 2011 and it is predicted to slow further this year, to lows as possible as 1.5 percent. Despite statistics still showing increasing growth Canadians are not back to where they were before the start of the recession. Carney believes however that a typical recovery cannot be expected due to the atypical nature of the recession.

Sharp cuts to Canada’s interest rates, decided by Carney to an unheard rate of 0.25 percent, and trillions of dollars in monetary stimulus measures significantly helped the Canadian economy in terms of breaking the fall. These measures however did account for the sudden unemployment of 430,000 Canadians nevertheless employment has begun rising and continues in this climb.

Despite some positive news concerning Canada’s economy, economic recovery is still fragile. Carney believes that focusing on the export sector should help especially if productivity is increased and by changing the mix of markets away from the traditional, developed economies to emerging markets.

The Bank of Canada has released predictions for economic recovery with production capacity expecting to return to its peak by the end of next year. But as noted by Carney the Canadian economy has contracted since 2007 and if global economic problems persist Canada may not see any further improvements. Low interest rates should keep the economy accelerating, albeit not that strong of a pace but returning to full employment will be difficult especially with struggling growth issues.

There is pressure upon Eurozone leaders to manage their economic crisis to ensure that other developed economies such as Canada don’t find themselves facing further problems.

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Related Links:
• Bank of Canada
Official Website

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