Pierre Cléroux, the Chief Economist and Vice President, Research, of Business Development Bank of Canada (BDC), said that while the Canadian economy is decelerating, the three questions on everyone’s mind – whether interest rates will rise, whether labour shortages will end and whether there will be a recession – may all be answered in the negative.

Addressing the participants during Canada India Foundation’s Speaker Series on 16 April 2019, Mr. Cléroux emphasized that all indications seem to suggest a global economic deceleration.

The Speaker Series saw enthusiastic participation from CIF members and guests comprising entrepreneurs, business professionals and leading members of the Indo-Canadian community.

Pankaj Dave, Co-Convener, CIF, welcomed the participants and introduced the speaker. Ramesh Chotai, one of the founding members of CIF, who was recently awarded the Pravasi Bharatiya Samman Award also spoke on the occasion.

The BDC’s Chief Economist gave an insightful overview of the global economic outlook, the economies of Canada, India and the United States. He also discussed the state of Ontario’s economy.

The global economy will grow at a more moderate pace, he said, and provided numbers of large economies. Europe 1.3 % (down), India 7.3 % (stable), China 6.3 % (down), Japan 1.0 % (down). As a result of the slowing down, expansion will remain unbalanced in 2019, and the real GDP global growth (%) will be 3.3%.

Global Economy

Mr. Cléroux predicted that the Indian economy will remain stable and will continue to grow at 7.3 %, which is less than the previous years, but better than any other comparable economy. He said, in India, both exports and investments are growing at a faster pace.

The US economy continues to grow and is expected to grow by 1.9 % in 2020. In the US, unemployment remains at a historic low and is at 3.8 %. In the US, job creation is healthy, and the tightening job market is raising salaries.

Mr. Cléroux said the Canadian economy is decelerating, and the GDP will go down from 1.8% in 2017 to 1.5% in 2018. Among the Canadian provinces, BC registered the maximum growth at 1.9% with Ontario and Quebec steady at 1.7%. The Canadian economy is slowing down because commodity prices are struggling, oil prices are slowly recovering and most importantly chronic labour shortage is slowing growth.

The Canadian economy, he explained, is close to full capacity and there are nearly half-a-million vacant positions in Canada and 53% SMEs are holding back investments because of labour shortages.

The interest rates are going up and the household debt ration is staggeringly high at 170 %. The biggest effect of consumer debt on the economy is that the interest payments are rising faster than household income. Retail sales are weakening, and home sales are falling.

However, there are some positive signs on the horizon, according to Mr. Cléroux, because exports are rising steadily and have crossed $664.5 billion and employment is solid, too. Briefly referring to the Ontario economy, Mr. Cléroux said that the slowing down of the province’s economy had to do with a maturation process.

He concluded with the three questions that preoccupy everyone’s mind:

Q. Will interest rates rise?

A. Probably not.

Q. Will labour shortages come to an end?

A. No relief in sight for at least the next ten years

Entrepreneurs have three options:

Q. When will the next recession hit?

A. Recession don’t just happen, it requires an unanticipated shock; growth is slowing down, but there are no signs of recession in sight

Vijay Sastry, Secretary, CIF, delivered the vote of thanks.

For more event photographs, click here: Pierre Cléroux

For Mr. Cléroux’s presentation, click here: Presentation