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US Economic Recovery will be a Key Aspect for Canada

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The economic scenario in Canada is pretty bleak at the moment. This is in spite of the economic recovery in the USA. Canadians have, for a long time now, been waiting for an economic situation which will bring about employment for the masses and provide financial security. The sharp decline in the value of loonie has exacerbated the frailness of the economy.

Policymakers in Canada are looking elsewhere for finding solutions to the economic woes of the country. They are hoping that the pickup in the economies of the US and Europe will have a positive impact on the Canadian economy.

Ed Clark, CEO of the TD Banks said this week that increasing household debts and home prices have left most Canadians in a “fragile” state. Echoing the sentiment, the International Monetary Fund said that the Canadian housing market was the most overvalued in the world.

USA is the chief economic partner of Canada. Any significant development in the US economy has an impact on the Canadian economy. This is one of the main reasons why policy makers are keeping their fingers crossed and praying that the US economy performs well in 2014 as well.

The US labor market has been on a resurgent path, and it is expected that things will be no different in 2014. The housing sector too has performed above the expectations. Also, the new budget deal will prevent a 2013-like situation of a government shutdown. The US economy posted a 3.2% growth in the fourth quarter of 2013. The significant thing about the fourth quarter’s performance was that it came in spite of the government shutdown.

Historically, a solid and well-performing US economy has augured well for Canada. This is one of the main reasons why expectations are sky-high. The next couple of years are going to be really challenging for the Canadian economy and if solid reforms are made, the economy might well be on the way to a resurrection.



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