The sleekly confident style of Mark Carney, the Bank of Canada’s youthful governor, was the featured act this morning in Ottawa. He’s emerging as one of the most interesting new figures on the federal scene, and the political implications of what he had to say about the economy are considerable.
Carney, 43, was appointed last year by Prime Minister Stephen Harper, reportedly on the strong recommendation of Finance Minister Jim Flaherty. Given the gruesome economy the government is now coping with, getting the made-for-TV technocrat on the case turned out to be a good call.
The Harvard and Oxford educated former Goldman Sach’s prodigy left private banking and returned to Canada in 2003 to join the public service. He impressed mandarins and politicians alike during stints at the BoC and the finance department. He is now gaining profile as the reassuring face of a sober, yet surprisingly optimistic, federal reaction to the economic crisis.
The big news from Carney this week is his bold projection that after suffering through a recession this year, the Canadian economy will bounce back strongly with 3.8 per cent growth in gross domestic product in 2010. That’s a lot more upbeat than many private economic forecasts.
He had this to say, at a news conference just off Parliament Hill this morning, to pessimists who doubt the steep interest rate cuts he has overseen, combined with other measures to stabilize financial markets and stimulate growth, can have much impact in the face of a global slump: “The laws of economics have not been suspended here.”
He went on: “That stimulus is going to have an impact and it’s going to start to bring the job market back.” And he stressed that he’s not counting all that much on spending, or other measures, in Flaherty’s budget next week to do the job. Referring mainly to historically low interest rates, he said “don’t underestimate the impact of what we have done.”
Predicting that “things will start moving this later this year, into 2010,” he was nonetheless clear that 2009 will be no picnic. “People are going to lose their jobs. The unemployment rate is going to rise,” he said. “That is the unfortunate reality of the recession.”
If he’s right, the implications for political strategists are clear. The Tories will want to ride out this year’s slump, and survive somehow into 2010, to take credit for a faster-than-feared recovery. On the other hand, the Liberals, and other opposition parties, might want to force an election this year to make sure the Conservatives wear these bad times. Or they’ll want to form a coalition government soon, to preside over—and claim credit for—the quick return to prosperity that Carney forecasts.