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Economy Lab

Delving into the forces that shape our living standards
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Entry archive:

What’s next for Alberta’s beleaguered economy?


Alberta’s economy was stealing headlines at the beginning of the decade for its healthy job market, soaring wages and vibrant energy sector. But over the past two years, events have conspired against the province. In the face of stubbornly low oil prices and a second consecutive year of recession, Alberta is in the worst shape it’s been since the 1980s.

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Britain sailing into uncharted waters after Brexit


When freshly minted British Prime Minister Theresa May cobbled together her first cabinet last week, one of her easiest decisions was to axe Chancellor of the Exchequer George Osborne. The scare tactics he employed as a high-profile leader of the “remain” camp had angered the Brexit crowd and his tough austerity cuts were blamed for leaving voters in a foul mood.

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Bank of Canada keeps the faith, but lacks answers


Stephen Poloz is usually a pretty easy-going guy, at least as far as central bank bosses go. So when he gets his back up a little in a press conference, you’ve got to take notice of the exposed nerve that’s just been hit.

“We resist the idea of turning 180 degrees on our forecast because of the last few data points,” the Bank of Canada Governor said in response to a question about why he remains so optimistic about Canada’s non-energy exports in the face of a four-month run of pretty miserable trade data that has tested the faith of others in this critical ingredient for the country’s economic recovery.

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Looming economic risks may temper Bank of Canada’s optimistic outlook


The Bank of Canada has spent much of this year showing an unshakable confidence that the Canadian economy was on track for better times ahead. Now might be as good a time as any to start to sound just a little shaken.

This Wednesday, the central bank delivers its latest interest rate decision as well as the quarterly update of its economic forecasts. While no one expects the bank to change its key rate, which has held at 0.5 per cent for the past year, observers will be paying keen attention to changes in the bank’s view of how the economy is unfolding, as well as how the bank views the considerable risks that are now looming around its outlook.

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European banks face crisis of confidence as economy sputters along


Avert your eyes, ladies and gentlemen. The carnage in Europe’s financial sector is growing bloodier.

Since January, the MSCI Europe Banks Index has plunged by a third, with much of the damage happening in the two weeks since the Brexit vote. The typical European bank now trades for only slightly more than half its book value, which is the market’s polite way of declaring that large portions of lenders’ supposed assets probably aren’t worth a plugged euro.

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Stalled exports tell a troubling story for Canada’s economy


Canada’s export sector was supposed to be the beacon of hope that would lead the country’s economy out of its oil-stained darkness. Instead, the latest disappointing trade statistics suggest the once-bright export outlook has descended into a thickening and uncertain fog.

Statistics Canada’s monthly merchandise trade report for May, released Wednesday, showed the monthly trade deficit clocked in at a massive $3.28-billion in May, the second-biggest trade hole in history. The biggest? That would be just a month earlier, April, in which the deficit was revised to $3.32-billion from an originally reported $2.94-billion. Three of the four biggest trade deficits of all time have come in the past three months alone.

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Investors eye this week's stability report from Carney


Investors will be watching closely as the Bank of England lays out its economic course after British voters opted for divorce from the European Union.

Britain’s central bank releases its semi-annual financial stability report on Tuesday, when it is expected to provide more clues on how it will bolster the country’s financial system amid mounting uncertainty.

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The Canada-Europe free trade deal is still uncertain after Brexit


Far from being dead, the Canada-Europe free trade deal is more alive than ever.

Or so says International Trade Minister Chrystia Freeland. Ms. Freeland said this week her European counterparts are highly motivated to demonstrate that, Brexit be damned, the EU still works. “If anything, the political momentum for [the comprehensive economic and trade agreement] is even stronger than it was before … because the EU is very determined to show it’s able to move forward,” Ms. Freeland said in an interview this week.

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How CIBC head Victor Dodig finally landed a U.S. prize


Eventually, every chief executive officer puts his stamp on the company he runs. Sometimes, it takes years. At Canadian Imperial Bank of Commerce, it’s happening apace.

Last June, less than a year after getting the top job, CEO Victor Dodig unveiled his strategic vision. He wanted CIBC to be a small and sturdy North American bank that would strike partnerships with technology giants when necessary – even Apple, the big banks’ occasional enemy.

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Best person to guide Britain through post-Brexit is already on the job


In the smouldering aftermath of Britain’s Brexit referendum, Canada’s prodigal son on the global financial stage finds himself in a precarious position. And the Brits are darned lucky Mark Carney is there.

In the new EU-divorcing state of the United (for now) Kingdom of Great Britain and Northern Ireland, Mr. Carney is considered an enemy of the state by many on the victorious Leave side of last week’s Brexit vote. His opponents in Britain’s political power corridors have charged that he overstepped his bounds as Governor of the Bank of England, Britain’s powerful central bank, by weighing in on the Brexit campaign and expressing his deep concerns about the economic and financial market consequences of a vote to abandon the European Union.

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Closer economic ties to Mexico, U.S. needed to fuel growth in Canada


After the Brexit shocker of last week, the North American Leaders’ Summit with Prime Minister Justin Trudeau, U.S. President Barack Obama and Mexican President Enrique Pena Nieto comes at a time when the United States and Mexico are more important than ever for Canada’s future prosperity.

Canada’s long-term economic potential has slipped to annual growth of 2 per cent or less due largely to demographic forces, specifically an aging population. Pursuing international opportunities is therefore critical to boosting – or even maintaining – Canadian living standards. Unlike the Brits, we should be seeking ways to engage our regional neighbours further.

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Brexit vote underlines need for a reformed globalization model


The narrow victory of the Leave side in the Brexit referendum demands a profound rethinking of the liberal globalization agenda.

At one, highly disturbing level, the majority for Leave was a clear victory for the nativist, often overtly racist, populist right, and a clear defeat for the economic and political elites who overwhelmingly backed the Remain side. As widely noted, this underlines the lack of broad popular support for deep economic and political integration, which seems to be increasingly pervasive in both Europe and the United States.

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Brexit leaves Great Britain facing a guillotine


Britain’s victorious Brexiteers woke up on Friday with a hideous hangover and a sudden realization of the scale of what they had done.

Sterling plunged against the dollar and billions have been lost on the London Stock Exchange. The Prime Minister has resigned; banks in the City of London are dusting off their “plan B” strategies of moving euro and bond traders to Frankfurt and Paris.

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Canada, Mexico need each other more than ever


When Justin Trudeau welcomes Mexican President Enrique Pena Nieto to this week’s NAFTA leaders summit in Ottawa, he’ll gush about the strong bond between the countries.

The awkward truth is that it’s been a distant and forgotten relationship, too often conducted by proxy through that big colossus in the middle – the United States.

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Global trade the big casualty of Brexit


The Brexit vote wasn’t really about commerce. It was about immigration, sovereignty and raw emotion.

But the consequences of the referendum will have sweeping effects on trade – in Britain, across Europe and beyond.

It’s a hit to trade flows, but also to the promise of trade.

The bold and grand experiment that is the European Union – the world’s largest functioning common market – has suffered a serious and potentially fatal blow.

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Brexit fallout: Worst yet to come for central banks


It looks like central banks in Canada and the rest of the advanced global economies did what they needed to do to manage the first day of a post-Brexit world – which, as it turned out, wasn’t much. But even if a feared financial market meltdown has been averted, the harder part of the job for central bankers in the Brexit fallout is yet to come.

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