Bank of Canada revises down growth for the rest of 2012


The Bank of Canada just published its third Monetary Policy Report for the year, the quarterly publication where it discusses growth and inflation projections for Canada and how developments around the world affect both of those. Here are a few highlights:


Source: Bank of Canada, July 2012 Monetary Policy Report

Numbers in parentheses indicate what the BOC was forecasting in the previous report, back in April–note the significant downward revision for growth in the second quarter of this year, down to 1.8 per cent from a previous prediction of 2.5 per cent.


“The additional prudent and timely measures recently announced by federal authorities are expected to contribute to a more sustainable evolution of housing market activity in Canada.” 


“Housing investment […] is around historical highs and showing signs of overbuilding.”


“Housing activity is expected to slow from record levels.”

Household debt: 

“Continuing high household debt levels in Canada could lead to a sharper- than-expected deceleration in household spending. Relatedly, if there were a sudden weakening in the Canadian housing sector, it could have sizable spillover effects on other areas of the economy.”


“Canadian exports are projected to remain below their pre-recession peak until the beginning of 2014, reflecting the dynamics of foreign demand and ongoing competitive- ness challenges, including the persistent strength of the Canadian dollar.”

Read the full text here.

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Bank of Canada revises down growth for the rest of 2012

  1. But….but….what ever happened to being best in the G7….envy of the world….the place every country should imitate…..our magic dual status as ‘ established old economy’ and ‘new emerging economy’, our Superpower tights and cape ….and all that crud?

    • Oh ya, these predictions are absolutely apocalyptic! We can’t survive on 1.8% growth! We’re all DOOOOOMMMEDDD!

      • Harper’s pre-recession transparent false confidence and subsequent habit of the brag’n’lecture (though European politicians certainly qualify for some finger-wagging at the rate they’ve given it out) at inopportune times is only exceeded in their irritating properties by those who are looking for the whole economy to collapse if only to spite him.

        For some, it’s beyond simple disagreement with policy decisions (or fear stemming from economic uncertainty) and well into hoping for further economic collapse simply because they are opposed to the current individual in Langevin Block. I’m not sure what the end game is. Perhaps jumping out from behind the bushes to say “See! I told you Harper was no good!” is all the payoff needed.

    • Learn what sectoral balances are. Canada has slower growth this year than the United States because the United States is still spending borrowed money like a drunken sailor (> 5% GDP deficits for as far as the eye can see). And in the UK and much of Europe where government are slashing spending too quickly, they are experiencing downward economic spirals (because France and Germany are unwilling to give equalization payments to the periphery.) (A monetary union requires a fiscal union, and intraunion equalization.)se

      Canada has been trying to move away from government stimulus led growth to normal private sector led growth. i.e. very moderate government spending restraint, and growing transfers to the provinces, and encouraging faster private development and investment by streamlining, but not eliminating, the approval processes, for things like pipeline, oilsands projects, and mines.

      Ultimately, sustainable economic growth has to come from private investment, not government spending, or personal consumption. More private investment, means governments gain more tax revenue and can spend more, and consumers can buy more. One wants to get off the government stimulus as quickly as possible, but not too quickly, before it becomes a debilitating addiction, leading to a downward economic spiral.

      • Yes, and I’m sure if we were going to have a recession, we’d have had one by now, right?

        Steve also pushed Europe to slash spending, when everyone knew it was a bad idea…..and in any case you are at least 2 months behind the times.

        Kindly don’t dignify Harp’s rubbish about the private sector with statements on here meant only for campaign slogans. It’s a failed economic ideology.

        • Since Ontario is a pretty large part of the canadian economy, how come their government spending spree hasn’t made us all rich by now?

          • Probably because there hasn’t been one.

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