June 2, 2009
Economic Snapshot — June 3, 2009
IMF and Economist Intelligence Unit give Canadian economy high marks
By John Clinkard, Consulting Economist, CanaData
Two external rating agencies, the International Monetary Fund (IMF) and the U.K.-based Economist Intelligence Unit (EIU), recently reported on Canada’s economic health. According to both reports, the country is in excellent shape.
The IMF commended Canada’s “impressive macroeconomic track record, strong policy framework and proactive response to the (economic) crisis” and indicated that these factors “place Canada in a better position than most countries to weather the global financial crisis ... and the financial strains evident elsewhere are markedly less serious in Canada.”
Moreover, the IMF directors indicated that Canada is well positioned to undertake further measures to stimulate its economy if warranted.
Using its Business Environment Ranking (BER) model, the Economic Intelligence Unit has taken a longer-term perspective on Canada’s prospects. The model ranks 82 countries according to the attractiveness of their business environment over the next five years. Canada’s score of 8.24 puts the country in third place overall, after Singapore and Finland.
As in the IMF report, the EIU gave Canada high marks for its proactive monetary and fiscal stimulus, the relative health of its financial system and the fact that it has the lowest government-debt-to-GDP ratio in the G7 group of developed economies.
In its latest analysis of the global business environment, the EIU noted that, for the first time since 1996, the average business environment score for the countries in the analysis declined. This essentially reflected the adverse impact of the current crisis on the medium-term outlook.
Key contributors to this deterioration included a worsening of market opportunities, increased macroeconomic and political risk and problems in financial systems. According to the EIU, annual average growth is projected to be 1.3% in the period from 2009 to 2013, roughly half of what it was during the previous five years.
John Clinkard has over 30 years experience as an Economist in international, national and regional research and analysis with leading financial institutions and media outlets in Canada.
Past, Present and Projected Business Environment Ranking –
Canada vs the United States
Data source: Economist Intelligence Unit/Chart: Reed Construction Data – CanaData.
