According to a new study released by the Desjardins Economic Studies team some industrialized countries are displaying signs of economic weakness, but the report indicates that this is not necessarily a trend.
"Growth should firm up in the second half of the year and continue in 2012, without being outstanding," stated François Dupuis, Desjardins Group Vice-President and Chief Economist. Leading the way, as an example of just this, is the Canadian economy, where a recovery is underway. Although things are definitely picking up in this country, Desjardins warns that there is still much work to do ahead- and that there may be some bumps along the way. There will be challenges presented by “the winding down of government stimulus plans, budget cuts, as well as a currency whose high value is still hurting exports.”
There are also fears that a looming interest rate hike will put downward pressure on the Real Estate market.
Analysts encourage businesses- and the general population for that matter- to continue to invest. “Economic growth has been revised from 3.0% to 2.9% for 2011 due to temporary weakness this spring; for 2012, growth is maintained at 2.7%," emphasizes Yves St-Maurice, Director and Deputy Chief Economist at Desjardins Group. “
The high price of oil has been of benefit to Newfoundland and Labrador- as well as Alberta. There is expectation as well that British Colombia may get a shot in the arm from massive reconstruction efforts underway in Japan to rebuild after the earthquake, through the end of this year- and in 2012 as well. They feel that, eventually, Ontario will benefit again from the auto industry. Although new home building has not slowed down as of yet, they feel that it is only a matter of time.
Consumer spending fared worse in Quebec than it did in other provinces, mostly due to a 1% increase in QST.
Analysts feel that the economic damage done by the earthquake in Japan, while far-reaching and tremendously impacting is short term. “The damage done by Japan's earthquake and tsunami on March 11, and problems that have arisen at a number of nuclear power plants have had repercussions on the global economy. A number of industrialized nations will have their economies slowed this spring by the collateral impacts of these recent events. However, the effects will be temporary. The rebuilding efforts needed will have a positive impact around the world in the second half of the year. “
With inflation on the rise, most central banks are utilizing caution in terms of raising interest rates and monetary policy. Both the UK and Canada are not expected to raise rates until the end of the summer at the earliest.
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