Winnipeg Free Press - PRINT EDITION

Foggy crystal ball

  • Print

The Bank of Canada was expecting economic growth in Canada to speed up about now. It didn't happen, maybe due to the tough winter, and now the bank expects the speed-up to happen in the second quarter of the year -- any day now.

Bank governor Stephen Poloz used his interest-rate statement and his monetary policy report, issued Wednesday, to explain what went wrong. Basically, it is the Americans' fault. They are buying plenty of oil and gas from Canada but not much else. Canada's share of the U.S. import market has declined, the bank estimates, to about 14 per cent from about 18 per cent in 2000. For non-energy commodities and for manufactured products, the declines are much steeper.

In January, the central bank thought Canada's GDP would expand in the first three months of this year at an annual rate of 2.5 per cent. The first-quarter data are not in yet, but the predicted growth didn't happen. It scaled back its estimate to 1.5 per cent.

Severe weather slowed the U.S. economy, curbing demand for Canadian goods, Mr. Poloz explained, and together with the 14-year-long decline in Canada's U.S. market share explains why growth was weak. But the U.S. expansion has to resume sometime. The bank expects Canadian output growth at annual rates of about 2.5 per cent in the remaining quarters this year.

This rosy view would be more reassuring if the bank had not just knocked one percentage point off its growth estimate for the first quarter. A forecasting agency whose growth estimate falls so wide of the mark should show modesty about the clarity of its crystal ball.

The main thing the Bank of Canada has to worry about is inflation, and on that front it has no worries. Prices are stable these days because workers have no power to drive up their wages and companies have no power to drive up their prices in the current economic climate. Price stability, fortunately for Canadians, is taking care of itself.

Editorials are the consensus view of the Winnipeg Free Press’ editorial board, comprising Catherine Mitchell, David O’Brien and Paul Samyn.

Republished from the Winnipeg Free Press print edition April 19, 2014 A16

Fact Check

Fact Check

Have you found an error, or know of something we’ve missed in one of our stories?
Please use the form below and let us know.

* Required
  • Please post the headline of the story or the title of the video with the error.

  • Please post exactly what was wrong with the story.

  • Please indicate your source for the correct information.

  • Yes

    No

  • This will only be used to contact you if we have a question about your submission, it will not be used to identify you or be published.

  • Cancel

Having problems with the form?

Contact Us Directly
  • Print

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

Have Your Say

New to commenting? Check out our Frequently Asked Questions.

Have Your Say

Comments are open to Winnipeg Free Press print or e-edition subscribers only. why?

Have Your Say

Comments are open to Winnipeg Free Press Subscribers only. why?

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010.

letters

Make text: Larger | Smaller

LATEST VIDEO

Glenn January won't blame offensive line for first loss

View more like this

Photo Store Gallery

  • KEN GIGLIOTTI / WINNIPEG FREE PRESS / Jan 10  2011 ‚Äì WEB STDUP ‚Äì Frosty morning at -15 degrees C , in pic frost covers the the Nellie McClung statue  on the MB Legislature grounds at 7am
  • A female Mallard duck leads a group of duckings on a morning swim through the reflections in the Assiniboine River at The Forks Monday.     (WAYNE GLOWACKI/WINNIPEG FREE PRESS) Winnipeg Free Press  June 18 2012

View More Gallery Photos

Poll

Which of Manitoba's new landlord-tenant rules are you looking forward to most?

View Results

View Related Story

Ads by Google