Canada’s Economy Still Need Stimulus

So, all the economic news about the resilient economy of Canada in this world wide recession is over?

According to Bank of Canada, the economy is suffering from low productivity and high Canadian dollar with resulting falling exports.

In a statement the Bank of Canada said “The global economic recovery is proceeding largely as expected, although risks have increased.”

I cannot justify the above positive statement by what the bank said afterwards which is closer to the reality of global economy.

Demand of Canada’s goods in its largest export market, the U.S. remains largely week and is expected to remain so for a longer period. The robust economy of emerging markets like, India, China, Brazil are experiencing a deceleration of economic activity. In Europe Greece, Ireland and other countries are drowning in debt. So, the global economy is not in a recovery mode, as the bank stated.

The global economy is still contracting. The few growth sprout we are seeing occasionally, are seasonal and not the sign for long-term recovery. The annual economic cycle inherently producing upswing in summer months before back to school and winter months in holiday season.

The growth is not consistent over each month. And, if you follow the consumer debt load, this should be clear that market is funded by credit. Net asset of consumers are dwindling. Expect to see unemployment rate going up after shedding of holiday jobs in January 2011 job report.

Economy needs stimulus…. but it must be spent with the end in mind. If job creation is the objective, spending money on infrastructure is not going to create the long term stable jobs. Providing stimulus to business owners with support for business growth will have a better impact on job creation and federal tax revenue.