“The Only Zen You Find on the Mountaintop is the Zen You Bring With You.” – Robert Pirsig
Bank of Canada Governor has Faith in Global Economy
The global economic upheaval is slowing growth in Canada, but Bank of Canada Governor Mark Carney doesn’t believe the country faces the prospect of the U.S. falling into recession. Carney told the House of Commons finance committee Friday that the U.S. is in the midst of its weakest recovery since the Great Depression, but he did not expect the world’s largest economy to shrink. “In response to uncertainties in Europe and the evidence of slowing global growth, equity and commodity prices have fallen significantly, and financial market volatility has increased markedly,” Carney said. “The spillovers to Canadian financial markets have been less pronounced but are still notable.” In its July monetary policy report, the central bank forecast the Canadian economy would grow 1.5 % cent in the second quarter, but the governor said Friday the bank now expects minimal growth or even a slight contraction in the economy in the quarter due to the global slowdown. “The considerable external headwinds that the bank has long identified are now blowing harder,” Carney said. “Relative to our prior expectations, we expect somewhat weaker economic momentum globally and, as a result, in Canada.” Mounting government debts in several European countries including Greece, Italy and Spain and the possibility that some could default on their payments, have been worrying global investors.
The testimony by Carney and Flaherty followed a report by Statistics Canada that the pace of inflation eased in July as increases in the price of gasoline slowed. The consumer price index rose at a annual pace of 2.7 % in July, down from a 3.1 % increase for June, giving the central bank room to keep interest rates at their exceptionally low levels, economists said. It was the first time that inflation has been below a pace of three per cent since February.
The TSX closed at 12007, down -535 points or -4.27% over the past week.
The DOW closed at 10818, down -451 points or -4.00% over the past week.
The S&P closed at 1124, down -55 points or -4.66% over the past week.
The Nasdaq closed at 2342, down -166 points or -6.62% over the past week.
Gold closed at 1847, up 101.00 points or 5.78% over the past week.
Oil closed at 82.64, down -2.75 points or -3.22% over the past week.
The CAD/USD closed at 1.0111, up 0.0016 points or 0.16% over the past week.
Sources: Bloomberg Canada, Bank of Canada, Statistics Canada, Investment Executive.