Macklem says Canada is at a difficult stage of its recovery

According to the central bank’s Governor Tiff Macklem, Canada’s recovery from the pandemic is at a very difficult stage right now, as increasing number of COVID-19 infections may slowdown economic growth in the nearest future and even deepen the economic hole.

He says household spending had been driving the recovery so far, but in order for the recovery to be sustainable, Canada has to increase exports, productivity and business investment.

“The economic recovery from the pandemic is at a very difficult stage now. In the nearest future, increasing number of COVID-19 infections will slowdown growth and may even worsen the economic hole,”- he noted.

“We are facing extremely high uncertainty, and the recovery is expected to be long and choppy.”

In Macklem’s opinion, exports and business investment may recover faster than after the 2008 global financial crisis. However, services exports would still face challenges until a vaccine is widely available.

He believes the recent vaccine news is positive and it puts a more certain time line on the possible rebound of the global demand.

At the same time, Macklem worries about the strengthening Canadian dollar, as it’s hurting the national exports in the key U.S. market.

Following the speech, the Canadian dollar remained close to its strongest level in more than 2,5 years at 1.2694, or 78.78 US cents.

Macklem says Canada has to increase production of high-value goods and services for export, noting the pandemic accelerated the growth in various technology services.

“We really need to develop new, fast-growing markets for our products. However, we also have to develop new, fast-growing products for our markets,” – he noted.