22 March 2008

Saturday night quickie: Depressing economic forecast

The Toronto Star financial columnist David Olive is giving five reasons to start worrying about the economic circumstances over the next while. 

In his maiden speech last week as governor of the Bank of Canada, Mark Carney was the bearer of bad news. The high commodity prices for everything from oil to wheat that have largely insulated Canada from the early phases of the U.S. economic slowdown are due for a fall, pulling down Canada's economic growth rate in 2008.

It's not like no one saw it coming.  It's just that it took a few people a while to notice. 

Around these parts, we've been covering the economic forecasts for months now, all of which pointed to a major slowdown in the economy.

For the record, here's the most recent outlook from TD Economics.  There are some inconsistencies in the report that aren't readily explained from the text.  For example, while there is a fairly understandable statement that Quebec and Ontario are the most vulnerable to slip into a recession, there's the odd grouping of Newfoundland and Labrador with provinces  likely to weather the economic slowdown in the United States. 

Still, TD is predicting an anaemic 1.0% real growth in provincial gross domestic product this year, tied with Quebec and only a half a percentage point above that of Ontario. Notice, by the way, that 70% of provincial exports go to the United States in the form of crude oil and refined crude products.  So much for the theory that "our" resources go to enrich central Canada.