'Is that really the best we can do? Yes.'

Mark Carney's last words as BoC chief

Outgoing Bank of Canada Mark Carney had said before that, as he leaves Canada to head the U.K.’s central bank on July 1, the economic picture he’s leaving behind in his home country is that of a glass that is “more than half full.” Today, in his last public remarks as a Canadian central bank official, he reiterated that point.

What awaits the next BoC chief is a delicate transition from a growth model based on household consumption, real estate investment and government stimulus to one propelled by exports and business investment, Carney said at the Board of Trade of Metropolitan Montreal.

“We cannot grow indefinitely by relying on Canadian households increasing their borrowing relative to income.”

Re-orienting the economy will be a “challenge,” Carney added, noting that the post-crisis rebound in Canada’s export sector is still over $130 billion shy of what it would have been in a typical post-war recovery, according to the Bank’s calculations.

Still, the governor also recalled that Canada has had it easier than most during the financial crisis, thanks to both pre-existing traits—such a solid, conservatively regulated and well capitalized banking system, an  inflation-targeting regime that was instrumental in using monetary policy to stimulate the recession-stricken economy, small federal fiscal deficits and a well step up monetary union, which ensured that the wealth from rising commodity prices didn’t just benefit resource-rich provinces—and a “massive and disciplined policy response.” The BoC slashed the key interest rate from four to 0.25 per cent at the height of the crisis and subsequently promised to keep rates at rock bottom, in order to give households and businesses the confidence to borrow. The government, for its part, hiked up public spending by three per cent and in 2010 accounted for one-third of economic growth, Carney noted. By the beginning of 2011, Canada has recouped all the output and the jobs lost during the downturn.

“Relative to our peers,” the governor remarked, “Canada is working.”

That said, in a global economy still struggling with the aftermath of the 2008 crisis, it might take time for Canada’s economy to be roaring again, as business investment and exports might remain below average in the short term.

Still, Canada has “a real advantage” over most other advanced economies, the governor told reporters during a press conference following his speech: “We’re not getting up every day wondering about how we’re going to fix things.” Canada, he noted, has the luxury of having a forward-looking agenda.

Now it’s up to Stephen Poloz to take it from here.