Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Business Briefing

Canada’s economy to outpace most of G7, but outlook dims: IMF Add to ...

These are stories Report on Business is following Thursday, July 24, 2014.

Follow Michael Babad and The Globe's Business Briefing on Twitter.

Canada near top of G7
Canada’s economy is on track to expand at the second-fastest pace among G7 countries this year, even though the outlook is slightly weaker, according to the latest International Monetary Fund projections.

Today’s report from the IMF highlights, in particular, the struggles of the euro zone and the still-uneven recovery in the United States after a brutal winter, as well as the troubles in emerging markets.

In the update to its earlier world economic outlook, released in Mexico City, the IMF now forecasts that Canada’s economy will grow by 2.2 per cent this year, down marginally from its April forecast of 2.3 per cent. It held its 2015 outlook for Canada steady at 2.4 per cent.

Despite the trim, Canada’s economy will be outpaced this year among the G7 nations only by Britain, at 3.2 per cent. Next year, according to the forecast both Britain and the United States will outstrip Canada, at 2.7 per cent and 3 per cent, respectively.

The IMF forecast puts the spotlight on the euro zone, where Germany’s economy is projected to grow by 1.9 per cent this and 1.7 per cent in 2015, France by 0.7 per cent and 1.4 per cent, and Italy, by 0.3 per cent and 1.1 per cent.

Japan will also lag, at 1.6 per cent and 1.1 per cent.

Almost six years after the collapse of Lehman Bros., the U.S. economy is now forecast to grow by 1.7 per cent in 2014, a downgrade from the April outlook that dragged down the global projection.

The global economy is now projected to expand by 3.4 per cent, down from an earlier 3.6 per cent, which, the IMF said, reflects “both the legacy of the weak first quarter, particularly in the United States, and a less optimistic outlook for several emerging markets.”

While global expansion is expected to pick up in the second half of this year, there are many threats across the globe.

“Increased geopolitical risks could lead to sharply higher oil prices,” the IMF said.

“Financial market risks include higher-than-expected U.S. long-term rates and a reversal of recent risk spread and volatility compression,” the group added.

“Global growth could be weaker for longer, given the lack of robust momentum in advanced economies despite very low interest rates and the easing of other brakes to the recovery.”

Late-breaking news

BlackBerry in talks
BlackBerry Ltd. says it’s in discussions with unnamed competitors for a joint effort that would rival the recent initiative by Apple Inc. and IBM Corp.

Chief executive officer John Chen told The Financial Times the talks are preliminary, and he wouldn’t identify those involved.

As The Globe and Mail’s Iain Marlow has reported, the Apple-IBM agreement, aimed at business apps, is a threat to the Canadian company in the midst of its turnaround.

Mr. Chen described the Apple-IBM partnership as akin to when “two elephants start dancing,” but it “validates what is a huge market.”

Mr. Chen said he’s not scared of competing, and he signalled the significance of the deal.

“ The bad news is that you are waking up two giants,” he told the news organization.

“It’s competition, but it’s good competition and we are going to be more nimble. You don’t want to be a strong guy in a market that is not growing.”

The fast and the furious
Corporate results flooded in fast and furious today, with major companies reporting on both sides of the border:

Potash Corp. of Saskatchewan boosted its outlook for the year as its second-quarter profit slipped, though by less than forecast, to $472-million (U.S.), or 56 cents a share, diluted, from $643-million or 73 cents a year earlier.

Loblaw Cos. Ltd. slumped to a loss of $456-million (Canadian,) or $1.13 a share, from a profit of $177-million or 63 cents, though revenue surged to $10.3-billion after its takeover of Shoppers Drug Mart.

Rogers Communications Inc. posted a drop in profit to $405-million, or 76 cents, from $532-million or 93 cents. Net additions of lucrative post-paid users fell sharply to 38,000.

Energy giant Encana Corp. missed the estimates of analysts as both operating profit and net sank, the former to $171-million (U.S.), or 23 cents, and the latter to $271-million, or 37 cents.

Ford Motor Co. bested the analysts as profit rose to $1.3-billion (U.S.), or 32 cents, from $1.23-billion or 30 cents, and revenue edged down slightly to $37.4-billion.

General Motors Co., in turn, took it on the chin given the hit from its recalls and the projected hit from a compensation fund. Profit plunged to $190-million, or 11 cents, from $1.2-billion or 75 cents.

ECB hacked
There’s something almost amusing in a demand from hackers for money from the European Central Bank.

As in, all the basket-case countries in the euro zone want money, so why not me, too.

The ECB disclosed today that its website was hacked. While much of its material is encrypted, certain e-mail addresses and contact information was stolen.

No “market-sensitive” information was threatened, the central bank said.

“The database serves parts of the ECB website that gather registrations for events such as ECB conferences and visits,” the institution said.

“It is physically separate from any ECB systems,” it added in a statement.

“The theft came to light after an anonymous e-mail was sent to the ECB seeking financial compensation for the data. While most of the data were encrypted, parts of the database included e-mail addresses, some street addresses and phone numbers that were not encrypted. The database also contains data on downloads from the ECB website in encrypted form.”

Authorities are investing, and anyone who’s data was at threat has been contacted, and passwords changed.

Five ways Calgary rules Canada
1. According to Statistics Canada yesterday, Calgary boasted the country’s top median total family income in 2012, at $98,300, surpassing the Ottawa area, which held the 2011 crown but now stands at $94,230. Edmonton, at  $96,030, also bested Canada’s capital.

2. Calgary is projected to lead Canada’s major cities in economic growth this year, at a pace of 3.4 per cent, according to the Conference Board of Canada.

3. The city’s housing market is on fire: Home prices are rising faster than any other city in the country, up 8.1 per cent in June from a year earlier, according to the latest Teranet-National Bank home price index reading. And according to the Conference Board, Calgary will see housing starts climb markedly this year to 14,437 from just more than 12,500 last year.

4. Calgary shoppers are out in force, with retail sales expected to rise 5.4 per cent this year, also according to the Conference Board.

5. Jobs, jobs, jobs. Already, Calgary’s jobless rate is just 5.4 per cent, not the lowest in the country, but close. The Conference Board, meanwhile, projects “solid employment growth” of an average 2.2 per cent a year from 2015 to 2018. And this from Douglas Porter, Bank of Montreal’s chief economist, about the province in general: “Annual employment in the province is now 3.5 per cent year over year, or miles above the 0.4-per-cent year-over-year national rate. If Alberta is stripped out of the national total, there would have been no job growth in the past year.”

Streetwise (for subscribers)

Real estate

ROB Insight (for subscribers)

Business ticker

In the know

Most popular videos »

Highlights

More from The Globe and Mail

Most popular