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

Three more cases of COVID-19 found in Red Deer

Across the province, two more deaths have been confirmed

A message from the Advocate publisher

In good times and bad, The Red Deer Advocate has been here… Continue reading

Red Deer Public Schools to lay off support staff June 1

Educational assistants at Red Deer Public Schools will be laid off June… Continue reading

Airport primed for expansion

Ambitious vision sees airport as air freight and aircraft servicing centre

Red Deer Food Bank getting support from Dr. Deena Hinshaw T-shirt sales

The Red Deer Food Bank will receive a big donation, thanks to… Continue reading

WATCH: Firefighters, RCMP help Red Deer boy celebrate 3rd birthday

Firefighters and RCMP officers helped a Red Deer boy celebrate his third… Continue reading

Alberta Health Services provides COVID-19 prevention tips

Alberta Health Services has a number of recommendations for people amid the… Continue reading

Alberta government website has latest COVID-19 statistics

Red Deer Advocate readers can stay up to date on the COVID-19… Continue reading

Police in Saskatchewan charge man with killing his parents and son

Police in Saskatchewan charge man with killing his parents and son

PM, Scheer among MPs to donate pay hike to charities during COVID-19 crisis

PM, Scheer among MPs to donate pay hike to charities during COVID-19 crisis

Feds likely didn’t have enough protective gear in emergency stockpile: Hajdu

Feds likely didn’t have enough protective gear in emergency stockpile: Hajdu

Supply-line disruptions could cause Canadian drug shortage

Supply-line disruptions could cause Canadian drug shortage

Duration of COVID-19 measures depends on obeying health authorities: PM

Duration of COVID-19 measures depends on obeying health authorities: PM

Parliament to sit again to approve more COVID-19 relief as spending climbs

Parliament to sit again to approve more COVID-19 relief as spending climbs

Most Read