Effect of oil price shock still unfolding but economy coping well so far: IMF

Canada's economy has coped well with a shocking decline in oil prices but the country's central bank and federal government should remain prepared to do more if the need arises, an International Monetary Fund analysis released Monday has concluded.

TORONTO — Canada’s economy has coped well with a shocking decline in oil prices but the country’s central bank and federal government should remain prepared to do more if the need arises, an International Monetary Fund analysis released Monday has concluded.

Cheng Hoon Lim, head of the IMF’s annual review of Canada’s economic performance, said it’s too soon to calculate the impact of the Alberta wildfires that have devastated a huge area including parts of Fort McMurray.

“We need to see the extent of the damage that’s been done to the oilsands industry,” Lim said in a conference call from Washington, D.C.

Still, rebuilding efforts in Alberta will likely provide “a positive boost to consumption and to investments,” she added.

Lim also said the Bank of Canada has room to lower its policy rate, currently at 0.5 per cent, to stimulate the economy.

“But for the Bank of Canada to resort to unconventional monetary policies, it will require another big shock to the Canadian economy — and we see that risk, at this stage, as being very remote,” Lim said.

Among the global risks identified by the IMF are persistently weak oil prices, trade and investments.

“On the domestic front, the high level of household debt and the housing market remain the most important vulnerabilities,” Lim said. “We expect to see loan delinquencies gradually rising, although these would be from very low levels.”

The IMF said Canada’s current economic slowdown has renewed concern about record high household debt levels and high housing prices in certain markets, such as Vancouver and Toronto.

It says the Bank of Canada’s policy of low interest rates and the federal government’s plan to increase infrastructure spending are appropriate, given the need to support economic growth in the medium term.

But the IMF report says it’s time for Canada to tackle its record of low labour productivity and calls for a more targeted approach to the Liberal government’s new child tax benefit to enable more women to participate in the workforce.

Lim said the IMF’s research in Canada and elsewhere has shown a statistically significant, positive effect on labour productivity when women enter the labour force.

Just Posted

Trans Mountain pipeline expansion gets second green light from Ottawa

OTTAWA — The federal Liberal government is giving the Trans Mountain pipeline… Continue reading

Sneak peak: Take a tour of Red Deer County’s best backyards, acreages and gardens

You can snoop around people’s backyards without any guilt while on a… Continue reading

New RDC president has three decades of experience working at colleges and universities

Peter Nunoda says he’s ‘excited’ to help transition the college into a university

Pro-pipelines rally draws crowd to City Hall

Canadian Taxpayers Federation says Canada missing out on billions in revenue

Blair says more gun-control action needed, signals no new steps before election

OTTAWA — Crime Reduction Minister Bill Blair says more must be done… Continue reading

Pricey tours of decaying Titanic shipwreck delayed until June 2020

ST. JOHN’S, N.L. — Adventure tourists who paid $168,000 each to help… Continue reading

Police searching for suspect after shooting at Toronto Raptors rally

Toronto police are still looking for a suspect after Monday’s shooting that… Continue reading

The corporate winners and losers from the Toronto Raptors’ historic win

We The North mania spread across Canada as the Toronto Raptors created… Continue reading

Efforts continue to raise profile of New Brunswick sprint champion from 1900s

HALIFAX — A New Brunswick sprinter who achieved world-class success in the… Continue reading

Campaign to eradicate rodents puts other animals at risk

The bird was a female cardinal. It was on the ground and… Continue reading

Opinion: Throwing cold water on fee for calling firefighters

There’s never any upside to adversity. Whether it’s the loss of a… Continue reading

‘This is our story:’ Winnipeg General Strike commemorated on screen, stage

WINNIPEG — A moment in history that changed Canada forever is headed… Continue reading

Most Read