Possible Concerns For Canadian Finances
The days of crisis and financial slowdown are over; there is no reason for us to worry anymore, or is there? This is not the situation and now the Canadian economy is facing more issues than the average person realizes.
The Bank of Canada predicts that the decline in economic growth is going to be a short-term problem and that the second half will be represented by more rapid growth. The bank states that energy prices should start falling, or at least not rise any higher. With the situation in Japan, it has been named as the source or reason behind the most recent depression seen. At first sight, this reasoning might look faultless, but if you start digging deeper, you find that since our economy is represented mainly by consumers, we must look elsewhere. Of course, the Japanese disaster has an genuine impact on the economy, but the thing is that it is not even close to being the fundamental reason for the slowdown. We therefore have to look closer to home, with the employment situation being erratic, the rising gas prices and all around prices increases, the future is unsettled.
In the US previous to the depression, the Canadian debt, how much income a person has compared to how much debt, was only slightly lower than the Canadian ratio is presently. Another thing in our favour is that the banking sectors 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 worry to home owners that property 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 sway the US economy, while with the banking situation as it is in Canada we are unlikely to see the same situation here.
The one thing that has to be apparent to everyone is that the Canadian economy is closely bound to that of the US — especially in the field of bank stocks and BC property market. So, we can say the Canadian economy is quite strong but that could fluctuate completely if the US economy drops any further. The contagion may hit from Europe, which is currently having some serious problems concerning Portugal, Ireland, and Greece. Circumstances have a way of escalating and drawing other countries in with tightening of credit which could affect the housing market, shifts in the equity market and the fall of commodity prices; all with the chance of destroying Canada’s economic potential.
