Canada's Recession Finally Ends

Canada’s Recession Officially Ends

As the third quarter’s GDP numbers come in, they show an official end to the recession.  Although the positive 0.4 percent growth is less than the 1-2 percent expected, it is nonetheless a positive sign. In terms of unemployment and GDP decline, this recession was less severe than those of the early ‘80s and ‘90s. The less-than-expected growth also signals that this may very well be a slow recovery and, like many of the other countries emerging from recessions, Canada is not fully out of the woods.

The concerns largely remain unchanged–unemployment and the still high currency value. A strong Canadian currency makes spending domestic dollars abroad or on imports more enticing because they are now cheaper, but it also sends the economic benefit of that purchase abroad rather than keeping it at home. It also makes Canadian goods more expensive for other countries to import, and this is a major component of Canada’s economy. A concern that has more recently cropped up is that the cheap and readily available credit could be creating asset bubbles in gold, housing, and some other financial products.

The strength of the domestic economy has “saved the day.” Because the credit problems that plagued many other major nations were not largely seen in Canada, it has allowed it to take advantage of the low interest rates in ways that other countries could not. This has helped stir a rapid and dramatic recovery in the housing market and will likely have a spillover effect, as the new homeowners purchase new items for their homes and complete renovations. It has also helped spur a surge in personal and in business investment not seen since 1997. 

Source: Canada.com