Three global developments in Canada
Three global developments in Canada are impacting the economy and increasing the uncertainty of their economy. The first global development is the intensification of the global financial crisis. This has resulted in pulling in the credit markets and instability of global equity. Growth and development will also be restrained as a result of the financial markets reducing leverage. It is important to note that the United States of America is already in recession. This will impact Canada in that the chances of this country and its global economy experiencing recession will significantly increase. This is the second factor affecting the economy. Thirdly, the decline in the prices of commodities in this country is also a huge cause of worry. Inflationary pressures have reduced globally. Policymakers have responded to this by increasing liquidity in their markets and re-capitalizing their banking sectors. This will affect growth in Canada. It will be slow and receptive in the first quarter but will pick up gradually and influence development.
It is essential to note that Canada will need to deleverage its global financial systems. This will take time and will involve tightening of the credit conditions than initially assumed. All these developments have affected Canada in that; their global economy predictions need to be revised down and corrected. For one, Canada is expected to be sluggish and slow when it comes to their exports. This is from the weaker outlook view. Secondly, the low prices of goods and services will also contribute to the sluggish and slow growth of this economy. It is also important to note that the leveraging of credit conditions will affect housing and business negatively. If the credit conditions in this country were to improve, the country’s economy would generally pick up. These predictions are restricted to the years 2008 and 2009.
The uncertainty of this economy begun with the excess supply predicted in the third quarter of the year 2008. This excess supply will grow through 2009 and will end in the year 2011. This will ease inflation and the recess of the economy. Economists predict that the economy will gradually improve throughout the years. This will, however, depend on the response rate of the Canadian policymakers and the banks. If the banks decide to ease their interest rates by 50%, the housing and business sector will significantly be affected. It is important to note that this country directly compares its economy with the United States economy. This improves the accuracy and preciseness of the predictions. This also helps increase the preparedness of this country when it comes to responding to the downfall of their economy.
In conclusion, some of the ideas raised in the article greatly resonated with me about what I understand of the economy of China. For one, every country wants their economy to succeed. They, therefore, employ measures to increase the success rates of this happening. Secondly, banks and financial institutions play a significant role when it comes to their economy. They are directly affected when the economy grows or recedes. It is important to note that all sectors of the economy are greatly affected when it comes to their savings. Ensuring that the inflation rates are controlled is one way in which countries can manage their economies. Different reasons can lead to the recess of an economy. From the provided examples above, controlling these reasons can help control global economies of different countries.