The 3 main recessions in Canada since 98 The dot-com bubble was a speculative bubble around .com companies in the IT sector. Over 1999 and Early 2000 Federal Reserve increased interest rates six times it causedBubble the burst of the bubble and a recession wich was particularly important in North America (USA/Canada) 2003 Increase of imports because of a strong Canadian dollar and opening of the Chinese Market. Oil crisis in the 2004 Middle East the barrel price rose above 30$. Rise in subprime mortgages deliquencies andSubprimes foreclosure => Households couldn’t pay anymore their mortgages. Prices of the houses went down => They couldn’t Crisis reﬁnance the ﬁrst mortgage with a second one => default of payment => Inﬁnite loop
Canada’s GDP annual growth rate GDP dropped from 6% (2000) to 0,8%(end 2001)20002001 Demand => accelerator effect => interest rate (1%) => multiplier effect => production (5,2%)2003 GDP dropped from 3,49%2004 (begin 2003) to 1,5%(end 2003) GDP growth rate has never2008 been as low as in 2009 with2010 -3,18% OECD sait it expected its members, mostly advanced economies such as Canada, to post Forecast for 2012 growth of 2,3% in 2011 and 3% in 2012
Canada’s Unemployment Rate2000 GDP => unemployment rate but not in the same proportion. If the GDP dropped by2001 5,2%, the unemployment rate increased by 1,3% GDP => unemployment rate2003 but not in the same proportion. If2004 the GDP dropped by 2,03%, the unemployment rate increased by 0,5% => a GDP growth rate so low2008 lead to an unemployment2010 rate very very high : 8,7% in 2009 => +1,8% compared to 2008 Canada’s unemployment rate is expected to remain steady in 2011-2012, in the high range Forecast for 2012 of 7%
Canada’s Inﬂation Rate2000 Increase from 2,1% to 4%2001 demand => interest rate + government budget (1,5% of GDP) + subsides2003 dropped from 4,4% to 2%2004 increase of taxes - decrease of the government budget by 0,1% of the GDP2008 deﬂation of 0,9%2010 taxes => demand => GDP => unemployment rate The Bank of Canada aims to keep inﬂation at the 2% target and if the forecat are right they Forecast for 2012 will reach their monetary policy goal.
Canada’s Current Account2000 increase from 1,5 billions to 11 billions ($CAN)2001 expansion of exports (+ 5 billions $CAN) and imports (+3 billions $CAN) dropped from 7,64 billions to2003 0,7 billions ($CAN)2004 decrease of imports (-3 billions) and exports (-3 billions $CAN)2008 deﬁcit of 13,7 billions ($CAN)2010 Big dependancy to the United States
Canada’s Exchange Rate2000 CAN$ => exports and imports => exports > imports => surplus => interest rate + government2001 budget => inﬂation CAN$ => exports and imports 1,62003 => exports > imports => surplus2004 => interest rate + government 1,2 budget => inﬂation 0,8 The Canadian dollar undergoes2008 0,4 a depreciation of 0,08$CAN2010 because of the deﬂation and 0 the decrease of the GDP. 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 The Bank of Canada faces a double issue for 2011 and 2012, they are expecting to increase Forecast for 2012 exports by keeping $CAN low/stable but if they do that the inﬂation rate will increase
Economic Climate Conclusion Upward market Downard market All the economic TRENDS indicators => are LINKED togeter Since 2000 => BEAR Market