Gloom about oil price shock is overblown, Bank of Montreal CEO says

The CEO of the Bank of Montreal says doom-and-gloom about the effects of the oil price shock are overblown because Canada's economy is diversified enough to withstand the downturn in the energy patch.

TORONTO — The CEO of the Bank of Montreal says doom-and-gloom about the effects of the oil price shock are overblown because Canada’s economy is diversified enough to withstand the downturn in the energy patch.

Bill Downe says it’s undeniable that the prolonged decline in the price of crude has had a significant negative impact in certain regions of the country — for example the oil-producing provinces, where employment and consumer confidence have taken a hit.

However, Downe says Canada’s economy is “more diversified than we’re giving it credit for.”

“We’ve seen Alberta go through this cycle,” Downe said in an interview in Toronto on Tuesday. “It’s well understood what the impact is and it doesn’t define the Canadian economy.”

During his address earlier Tuesday to shareholders at the bank’s annual meeting, Downe said he expected the economy to grow by about two per cent this year, in spite of lagging energy prices.

His forecast contrasts with the Bank of Canada’s prediction of 1.4 per cent economic growth this year, though that did not take into account new spending in the federal budget released last month. The central bank is expected to update its projection when it releases its new monetary policy report April 13.

“Canada’s resource wealth has not gone away,” Downe told shareholders. “A market price correction does not mean that an enviable national asset has suddenly become a liability.”

Downe said economic fundamentals remain strong, noting that low interest rates, steady job growth and low fuel prices have boosted consumer spending in most regions of the country.

Downe blamed analysts and news reports for the overly pessimistic picture of how low oil prices will affect both the economy and the bank.

“Analysts and the financial media have been singularly focused on the impact of lower oil and gas prices — and commodity prices generally — on our bank and the interconnected regional economies that define our North American footprint,” he said.

“The level of apprehension about markets has been disproportionate to the evidence — largely, I think, because we’ve all becomes captives to the 24-hour news cycle.”

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Ben King scores for the Red Deer Rebels during the third period of a Western Hockey League game against the Calgary Hitmen at the Westerner Park Centrium Saturday. (Photo by Rob Wallator/Red Deer Rebels)
Rebels complete comeback to pick up first win of season

Rebels 3 Hitmen 2 (OT) The Red Deer Rebels were able to… Continue reading

A health-care worker prepares a dose of the Pfizer-BioNTech COVID-19 vaccine at a UHN COVID-19 vaccine clinic in Toronto on Thursday, January 7, 2021. THE CANADIAN PRESS/Nathan Denette
Red Deer dips below 300 active COVID-19 cases

The number of active COVID-19 cases in Red Deer continued to drop… Continue reading

Lyn Radford, 2019 Canada Winter Games board chair, was named 2020 Sport Event Volunteer of the Year at the Prestige Awards. (File photo by Advocate staff)
WATCH: Lyn Radford wins award for volunteer efforts

The board chair of the 2019 Canada Winter Games in Red Deer… Continue reading

Mount Pearl Senior High in Mount Pearl, N.L., remains closed on Wednesday, March 3, 2021. The provincial health authority says there were 185 cases at 22 schools, including 145 infections among staff and students of one high school in Mount Pearl that was an early epicentre of the outbreak. THE CANADIAN PRESS/Paul Daly
In Newfoundland and Labrador, three ingredients made for explosive COVID-19 outbreak

ST. JOHN’S, N.L. — With her classes, three part-time jobs and a… Continue reading

A passenger places a tag on luggage at the departure terminal at Toronto Pearson Airport, in Mississauga, Ont., Friday, May 24, 2019. The economic and life disruption caused by the COVID-19 pandemic has prompted many recent immigrants to leave Canada and return to their countries of origin, where they have more social and familial connections. THE CANADIAN PRESS/Chris Young
COVID-19 pandemic prompts recent newcomers to leave Canada for their home countries

OTTAWA — The economic and life disruption caused by the COVID-19 pandemic… Continue reading

Rail cars wait for pickup in Winnipeg, Sunday, March 23, 2014. The fierce debate over cross-border pipelines is putting more Canadian oil and gas on trains destined for the United States — a country experts fear is ill-equipped for the potential consequences. THE CANADIAN PRESS/John Woods
As debate rages over cross-border pipelines, U.S. analysts brace for more oil by rail

WASHINGTON — The fierce debate over cross-border pipelines is putting more Canadian… Continue reading

Pictures and notes in from friends and classmates make up a memorial in support and memory of Aubrey Berry, 4, and her sister Chloe, 6, during a vigil held at Willows Beach in Oak Bay, B.C., on December 30, 2017. THE CANADIAN PRESS/Chad Hipolito
Mother of slain daughters supports recent changes to Canada’s Divorce Act

VICTORIA — Legal experts and a mother whose ex-partner was convicted of… Continue reading

Radio and television personality Dick Smyth is shown in an undated handout photo. THE CANADIAN PRESS/HO
Dick Smyth, Canadian maestro of news radio commentary, dies at 86

TORONTO — Radio and television personality Dick Smyth, whose booming commentary filled… Continue reading

Walter Gretzky father of hockey hall-of-famer Wayne Gretzky waves to fans as the Buffalo Sabres play against the Toronto Maple Leafs during third period NHL hockey action in Toronto on Tuesday, January 17, 2017. THE CANADIAN PRESS/Nathan Denette
Funeral for Walter Gretzky to be held Saturday in home town of Brantford, Ont.

The funeral for hockey legend Wayne Gretzky’s father Walter will take place… Continue reading

A sign for the Canadian Security Intelligence Service building is shown in Ottawa on May 14, 2013. A newly released audit report shows that difficulties with the judicial warrant process at Canada's spy agency — an issue that made headlines last summer — stretch back at least nine years. THE CANADIAN PRESS/Sean Kilpatrick
Spy warrant shortcomings stretch back almost a decade, newly released audit shows

OTTAWA — A newly released audit report shows that difficulties with the… Continue reading

In this file photo, a lotto Max ticket is shown in Toronto on Monday Feb. 26, 2018. (By THE CANADIAN PRESS)
No winning ticket for Friday night’s Lotto Max jackpot

TORONTO — No winning ticket was sold for the estimated $29 million… Continue reading

Most Read