Top Financial Issues Facing Canada
The world now lives in the fear of financial crisis. The European Union, United States of America, all have been its victims. It is not different about Canada either. It is also struggling with financial problems. In the wake of recent events, here are the seven big Canadian financial issues.
First one of the seven is the fact that Canada’s deficit was 3.3% more than their gross domestic product. This is one of the worst readings in a developed country. This is also the highest reading in past 20 years. This has resurrected the fear of the era which saw Canada’s debt rate hit the bottom.
The second one is its lack of economic slack. Official estimate says that Canada’s output gap is minus 1.5 percent, which is smaller 5.9 percent of the demographically adjusted unemployment rate. Studies show that firms are now struggling to meet the demand of worker. This is not a good sign for the financial sector of the country. The country is going to struggle to keep up with the pace of other countries.
Next one is in the housing market. Despite the data says the housing market is actually doing very well, especially in the more popular centers like Kelowna BC, this is mostly due to the fact that Canadian’s offer cheap borrowing cost and are ready to provide ready access to credit. Only a few countries managed to get profit by using this combination.
The fourth worry is about household credit which has shrunk to two-thirds from its peak and is expected to go down further.
The fifth one is the fact that studies show Profit of Canadian corporate has fallen five of the seven quarters. Firms all around that are affected with the decline of commodity price and are now seriously considering their future investments. Canada too will be affected by this.
Canada’s poor competitiveness is the next problem. Unlike other countries, which were affected by the global financial crisis, where they were forced to hit the reset button, Canada managed to avoid such decision with the combination of stronger currency and inferior productivity growth. But now that has forced the cost of labor to raise up to 53% compared to The USA.
The seventh one is Canada’s trade market is on decline due to Canadian dollar fall and fall in commodity price