Is there any need for us to worry about the economic instability of our country, isn't the most difficult part over and done with now? This is not the position we are in and now the Canadian economy is facing more worries than the average person realizes.
The Bank of Canada assumes that the drop in economic growth is going to be a short-term problem and that the second half will be marked by more rapid growth. This is based entirely on a plausible but uncertain supposition that levels of energy prices will not rise, and that they’re more likely to decline. The current excuse for the depression, however, is thought to have arisen from events in Japan. A perfectly logical reason, but underneath this problem the consumers are the individuals who influence our economy. Of course, the Japanese issue has an genuine impact on the economy, but the thing is that it is not even close to being the primary reason for the slowdown. The majority of consumers are perplexed by the effects of gasoline prices and erratic job growth.
The Canadian debt to personal means ratio is at present approximately 1.5, a bit higher than the US pre-depression ratio. Another thing in our favour is that the banking institutions are on a lot firmer ground, meaning that if there was a problem with debt, then the banks would still stay strong. It is always a concern to home owners that home prices are going to fall especially during any recession; but at the end of the day the effect on bank profits are not going to be as bad as they were a few years ago. In the US there have been bailouts that influence the US economy, while with the banking situation as it is in Canada we are unlikely to see the same thing occurring here.
The US and Canadian monetary status are closely linked, so trouble facing the US could impact negatively on Canada, including banks and BC property market. So, we can say the Canadian economy is quite healthy but that could fluctuate dramatically if the US economy declines any further. The contagion could hit from Europe, which is currently having some serious problems with Portugal, Ireland, and Greece. Conditions have a way of escalating and drawing other countries in with tightening of credit which could affect the property market, shifts in the equity market and the fall of commodity prices; all with the chance of destroying Canada's economic potential.
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