Just picking through the details of Poloz’s statement and while the BOC have cut back global growth forecasts the still have a positive outlook over the global outlook. The US economy is “gaining traction” and particularly in Canadian exports sectors, exports in general are being boosted by the lower CAD.
Excess capacity in non-energy exports is still an issue and a reason why business investment is being delayed. One of the reasons is the closure or restructuring of factories. This may possibly lead to a change in the employment picture as these closures often lead to more permanent job losses.
With employment still an up and down affair Poloz says that jobs will gain meaningfully when the economy enters the “rebuilding phase” of the cycle a led by firms becoming more confident about future export demand.
Excess capacity is one of the big problems for Canada and it’s taking a long time to close it up, as it is in the US and UK. Poloz is holding out for business confidence to increase and the BOC have very little they can do about that. The US picking up will obviously help Canadian business but it’s still something that’s not going to happen overnight.
Poloz finding it tough to juggle the Canadian economy
Some relief for inflation may come from falling commodity and energy prices but as Canada is a commodity country the flipside is the downside for the overall economy. The boys from the north spend a lot of their time in the US’s tailwind and that’s not changing anytime soon.
