Canada is capturing world attention on a number of fronts these days. Although better known for our diminutive, self-effacing persona, Canadians could be forgiven for taking special pride in key recent developments. These are especially welcome, given the general abundance of bad international news in the past 24 months, and are a boost to Canada ahead of the coming economic recovery.
This year started well, with Canada hosting the XXI Olympic Winter Games in Vancouver. Undaunted by less-than-ideal weather, the Games proceeded and concluded very successfully. That on its own was an enviable achievement, but to top it off, Canada walked away with a record haul of gold medals for a Winter Games, capped by a particularly sweet victory in the hockey final.
At the same time, Canada is basking in the halo of economic successes. No major developed economy has come close to Canada’s growth pace in the past six months. Back-to-back increases of 4.9 per cent in the fourth quarter of last year and 6.1 per cent in the first quarter of 2010 are well ahead of the G-7 mean, and are also considerably higher than for other commodity-producing, small open economies.
Economic downturn has brought significant fiscal deterioration to developed economies. On this front, Canada is no exception. Even so, our fiscal position is the envy of large industrialized nations. At the outset of recession, Canada’s gross public debt amounted to just 65 per cent of GDP, and by 2011, the OECD estimates it will have risen to 89 per cent. In contrast, the US, France and Germany will likely have debt levels close to 100 per cent of GDP, and Japan’s will have soared to an unthinkable 200 per cent of GDP. Put simply, restoring fiscal health suggests a far smaller relative future tax liability for Canadians.
Concern continues to swirl around global financial markets, and the pressure is on to develop structural safeguards aimed squarely at preventing repetition of the practices that brought major institutions to their knees late in 2008. The prudent practices of Canada’s big banks shielded them from the worst of the storm, and their advice is now being eagerly sought by policymakers the world over as they search for an appropriate institutional and regulatory framework. The relative health of Canada’s financial sector should prove to be an advantage for Canadian business in the near term.
Canadian exporters also seem to be showing a new openness to international trade. As years of steady currency appreciation eroded our competitiveness with our key trading partner, Canadians began to diversify. Exports to non-traditional destinations swelled at an impressive annual pace toward the end of the last growth cycle, lifting the share of non-US trade from 13 per cent in 2002 up to 22 per cent by 2008. Recession did not interrupt this foray, and sustained strength of the loonie suggests that Canadian exporters will forge ahead, further extending the diversification of our trade activities.
Given this backdrop, it seemed fitting that Canada played host to the world at the recent G8 and G20 meetings. Agreements on a timetable for fiscal rebalancing, principles for strengthening the financial sector and international development assistance have many hailing the meetings a true success.
The bottom line? Worries aplenty dog the global economy, but in the
midst of the mayhem, Canada has chalked up significant key wins that
give hope for continued future success.