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These are stories Report on Business is following Tuesday, Nov. 27, 2012.

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Growth to stagnate
The OECD has a warning today for the next Bank of Canada governor: Higher interest rates may be needed at just about the time Mark Carney's successor takes over.

In a new global outlook, the Organization for Economic Co-operation and Development forecasts Canada's economy will log "moderate" growth until mid-2013.

The economy is projected to end this year with expansion of 2 per cent, followed by 1.8 per cent in 2013 and 2.4 per cent in 2014.

Projections for unemployment are notably bleak, at 7.3 per cent this year, 7.2 per cent in 2013 and 6.9 per cent in 2014, levels that some (a.k.a me) might suggest could put off the so-called need to hike rates. Particularly given the tame outlook for annual inflation of 1.6 per cent this year, 1.4 per cent in 2013 and 1.8 per cent in 2014, each below the Bank of Canada's target of 2 per cent.

"Housing investment and house prices are set to cool somewhat in response to tighter mortgage rules to prevent households from becoming over-extended," the group said, referring to the latest round of mortgage restrictions that came into effect in the summer.

"The public sector is consolidating, and exports are being held back by poor competitiveness and weak global growth," the OECD said in its look at all its member nations.

"Business investment should remain relatively strong, however, thanks to global demand for natural resources, low capital costs and corporate tax rates, and the high exchange rate, which is reducing the price of imported capital equipment.

That high exchange rate is also dampening Canadian exports, which, on a net basis, are projected to slump by 0.2 per cent this year and 0.4 per cent next, with a slight pickup in 2014.

Mr. Carney and his colleagues have already signalled their intention to resume raising interest rates, though who knows what will happen given the global uncertainty, notably in the United States and Europe.

And Mr. Carney will, by that point, have taken over as the new governor of the Bank of England.

Most observers weren't anticipating an actual hike until well into next year, anyway, so the OECD's call is unsurprising.

Some observers, however, see an interest rate hike now even further off given the change at the helm.

"The BoC has a very strong team, but it is difficult to imagine a bias change amid leadership uncertainty and in the early going for Carney's successor," said Derek Holt and Dov Zigler of Bank of Nova Scotia.

"This is a further factor in favour of our view that the BoC will remain on hold until 2014 with the bigger risk being later rather than sooner as housing comes off the boil and the trade picture remains under pressure," they said in a research note.

For its part the OECD said "economic slack is not large" and a shift to higher rates may be required by the second half of next year.

"If housing-market imbalances worsen, the government should respond with further macro-prudential measures. Federal and provincial budget consolidation is needed and welcome, but if new shocks were to weaken underlying growth materially, the pace of debt reduction should be slowed."

The latter is a call to Finance Minister Jim Flaherty, whose latest economic update has already pulled back on deficit targets.

Over all, the OECD forecast a "hesitant and uneven recovery" for the global economy over the next couple of years, warning that "decisive policy action" is needed to head off another recession.

It cited the budget standoff in the United States and the ongoing troubles in the 17-member euro zone.

(There are many comments today about Mr. Carney's appointment, things about hockey players and the like, though I haven't seen a lot of the use of "eh." One of my favourites comes from Derek Holt and Dov Zigler at Bank of Nova Scotia: "Yesterday's move by BoC Governor Carney to head the BoE was probably the biggest sale of Canadian talent since Wayne Gretzky's move to LA.")

Greece gets its deal
The deal among Greece's lenders leaves much to the imagination. As in, try to imagine the day when Athens is on a sustainable path.

"Over all, the main concern is that this doesn't tackle the underlying austerity trap which dooms Greece to a seemingly never-ending cycle of recession and poor public finances," said Kit Juckes, Sébastien Galy and Olivier Korber of Société Générale.

"But then, as one wit put it, the deal doesn't provide a solution to cancer either. In other words, it would be wrong to expect too much and yet the market reaction to the 'deal' is still disappointing."

Indeed, one of the problems is that some of the issues aren't worked out, though the deal between the finance ministers of the 17-member euro zone and the International Monetary Fund means Greece can get about €34-billion in bailout funds and stave off bankruptcy. Again. And for now.

This one's certain to come back and bite Europe. But for now, Athens gets some leeway in that its target is now to cut its ratio of debt to gross domestic product to 124 per cent by 2020.

"After several meetings, hours of talks and a number of false starts it appears that Greece has finally got its debt deal and with it around €34-billion of new bailout money, however some elements still remain to be agreed upon, and as such the potential for further wrangling and potholes in the road remains," said senior analyst Michael Hewson of CMC Markets in London.

"It appears that the interest rates on Greek loans, would be reduced or deferred, while some maturities will be extended, which is likely to incur losses for some countries who have borrowed money at much higher rates."

"Meanwhile, yesterday's news that the next head of the Bank of England is Canadian Mark Carney has seen stocks of Céline Dion, Bryan Adams and Mountie jokes rise dramatically."

Bombardier in huge deal
Canada's Bombardier Inc. has secured a massive sale of business jets, at $7.8-billion (U.S.) the biggest in its history, The Globe and Mail's Bertrand Marotte reports today.

The deal is with VistaJet for up to 142 Global business aircraft, made of firm orders for 56 jets and options for 86 more.

"We view this announcement as positive for Bombardier as it confirms its strong leadership in terms of market share in the high-end segment following the major orders from NetJets and VistaJet," said Desjardins analyst Benoit Poirier.

The only other order of this magnitude for Bombardier was last June's commitment from NetJets to buy up to 275 Challenger jets, valued at about $7.3-billion.

"By any standard, this is a historic order for Bombardier," said Steve Ridolfi, chief of the company's business aircraft unit.

Output slows in South Africa
The unrest in South Africa's key mining sector dragged down economic growth in the country to 1.2 per cent, annualized, in the third quarter, below what had been expected.

The troubles in the mining industry, beset by violent strikes earlier in the year, drove down output in the sector by 12.7 per cent, Statistics South Africa said today.

South Africa's latest economic reading sets the stage for those later in the week in Brazil and India.

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