OTTAWA, - In its 2012 Economic Outlook, the Canadian Chamber of Commerce observes that Canada's sound banking system, comparatively better fiscal position, resilient housing market and strong corporate balance sheets have steered the economy through turbulent waters in 2011, but 2012 might bring a more challenging reality and constrained growth is expected.
"Fortunately, Canada has fared relatively well in 2011 but we expect modest growth ahead, constrained by a very challenging external environment, especially the situation in Europe." said Perrin Beatty, President and CEO of the Canadian Chamber of Commerce. He added: "Needless to say, these are very uncertain times for the global economy, and the risks are significant."
Failure to contain the crisis in Europe is the most serious risk facing the global and Canadian economies. Developments in Europe have intensified pressures on financial institutions in advanced countries, with European banks facing a marked reduction in their access to wholesale funding. The Bank of Canada said that if the crisis was to deepen and spread further to the larger European economies, transmission to Canada could become more severe, through the credit and funding channels.
On the domestic front, the major risk relates to household debt. Because of high debt loads, Canadian households—especially low-income Canadians—are more vulnerable to rising interest rates, job loss and asset price declines than in the past.
Of course, not all of the risks to the outlook are on the downside. The recovery in the U.S. may be stronger than anticipated resulting in higher demand for Canadian exports. Additionally, borrowing by Canadian households may continue to exceed income growth providing a greater impetus to domestic demand than expected.
View the Canadian Chamber's 2012-2013 Economic Outlook.
The Canadian Chamber of Commerce is the vital connection between business and the federal government. It helps shape public policy and decision-making to the benefit of businesses, communities and families across Canada with a network of over 420 chambers of commerce and boards of trade, representing 192,000 businesses of all sizes in all sectors of the economy and in all regions. News and information are available at Chamber.ca or follow us on Twitter@CdnChamberofCom.
