In an economic climate where the Bank of Canada is considering rate increases, many are watching closely the economic growth in Canada. With record trade deficits and a struggling economy, many question whether the country can sustain such growth. Will Canada bounced back as it did during the last two recessions? Can it overcome the same troubles that the United States has had? These are important questions and the answer will likely be an optimistic one if Canada's future economic growth can fulfill its promise to improve living standards and create more jobs.
Canada is a rich country with a diverse geography. It shares borders with six other countries including Mexico, New Brunswick, Nova Scotia, Quebec, and Ontario. The country is blessed with a fertile agricultural landscape that supports both farming and commercialization. A key to Canada's economic future is the country's dependence on exporting its wayward produce to the United States. For years, Canada has enjoyed a trade surplus, allowing it to buy U.S. Treasuries and other goods at a low exchange rate and resell them to the United States at higher values. This has allowed Canadian exporters to enjoy healthy prices and the benefits of having customers in the U.S., not only on food imports but in goods ranging from automobiles to clothing to electronics.
There is little doubt that Canada can continue its strong economic growth. The key for the future lies in the ability of Canadian businesses to exploit the international opportunities provided by the internet. The creation of new internet technologies such as telecommuting and the development of highly efficient international shipping systems are opening up countless new business opportunities and making it possible for Canadians to take advantage of the economic future of the world.
The current economic situation in Canada is creating potential for economic growth. The past decade has seen an increase in consumer spending across the board, but in particular, oil prices have been affected by the global financial crisis. Consumer confidence is beginning to rise again, but rising fuel costs and the slowing economy will affect consumers differently in the coming years. The strength of the Canadian dollar is expected to remain above the U.S. dollar over the coming months. This is expected to benefit exporters and help the economy to maintain or build momentum.
Beyond the immediate economic outlook, there are a number of factors that will determine the eventual direction of the Canadian economy. These include the health of the dairy sector, the health of the Canadian dollar, and the health of the Canadian economy. All three of these areas currently face some degree of pressure. Health . . . . . . care spending is anticipated to grow faster than average in most provinces. The weak U.S. dollar is causing concern in certain industries, while the lack of available housing is constricting development in some regions.
The potential for economic growth in Canada is tremendous. The combination of a strong economy, stable interest rates, and a favorable currency exchange rate make Canada an attractive place to do business. With the right leadership and policies in place, this potential can become a reality.