I analysed 5 economic indicators (GDP, BOP, Inflation rate, Unemployment and Exchange rate) of Canada and compare them to those from Argentina.
The presentation was Monday 20/12/2010 in Brussels (EPHEC)
3. The 3 main recessions in Canada since 98
The dot-com bubble was a speculative bubble around
.com companies in the IT sector. Over 1999 and Early 2000
Federal Reserve increased interest rates six times it caused
Bubble the burst of the bubble and a recession wich was particularly
important in North America (USA/Canada)
2003 Increase of imports because of a strong Canadian dollar
and opening of the Chinese Market. Oil crisis in the
2004 Middle East the barrel price rose above 30$.
Rise in subprime mortgages deliquencies and
Subprimes foreclosure => Households couldn’t pay anymore their
mortgages. Prices of the houses went down => They couldn’t
Crisis refinance the first mortgage with a second one => default of
payment => Infinite loop
4.
5. Canada’s GDP annual growth rate
GDP dropped from 6% (2000) to 0,8%(end 2001)
2000
2001 Demand => accelerator effect => interest rate (1%)
=> multiplier effect => production (5,2%)
2003 GDP dropped from 3,49%
2004 (begin 2003) to 1,5%(end 2003)
GDP growth rate has never
2008
been as low as in 2009 with
2010
-3,18%
OECD sait it expected its members, mostly advanced economies such as Canada, to post
Forecast for 2012
growth of 2,3% in 2011 and 3% in 2012
7. Canada’s Unemployment Rate
2000 GDP => unemployment rate but not in the same proportion. If the GDP dropped by
2001 5,2%, the unemployment rate increased by 1,3%
GDP => unemployment rate
2003 but not in the same proportion. If
2004 the GDP dropped by 2,03%, the
unemployment rate
increased by 0,5%
=> a GDP growth rate so low
2008 lead to an unemployment
2010 rate very very high : 8,7%
in 2009 => +1,8%
compared to 2008
Canada’s unemployment rate is expected to remain steady in 2011-2012, in the high range
Forecast for 2012
of 7%
9. Canada’s Inflation Rate
2000 Increase from 2,1% to 4%
2001 demand => interest rate + government budget (1,5% of GDP) + subsides
2003 dropped from 4,4% to 2%
2004 increase of taxes - decrease of
the government budget by 0,1%
of the GDP
2008
deflation of 0,9%
2010
taxes => demand => GDP
=> unemployment rate
The Bank of Canada aims to keep inflation at the 2% target and if the forecat are right they
Forecast for 2012
will reach their monetary policy goal.
11. Canada’s Current Account
2000 increase from 1,5 billions to 11 billions ($CAN)
2001 expansion of exports (+ 5 billions $CAN) and imports (+3 billions $CAN)
dropped from 7,64 billions to
2003 0,7 billions ($CAN)
2004
decrease of imports (-3 billions)
and exports (-3 billions $CAN)
2008 deficit of 13,7 billions ($CAN)
2010
Big dependancy to the
United States
13. Canada’s Exchange Rate
2000 CAN$ => exports and imports => exports > imports => surplus => interest rate + government
2001 budget => inflation
CAN$ => exports and imports 1,6
2003 => exports > imports => surplus
2004 => interest rate + government 1,2
budget => inflation
0,8
The Canadian dollar undergoes
2008 0,4
a depreciation of 0,08$CAN
2010
because of the deflation and
0
the decrease of the GDP. 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
The Bank of Canada faces a double issue for 2011 and 2012, they are expecting to increase
Forecast for 2012
exports by keeping $CAN low/stable but if they do that the inflation rate will increase
14. Economic Climate
Conclusion
Upward market
Downard market All the economic
TRENDS indicators
=> are LINKED togeter
Since 2000 =>
BEAR Market