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“We lost over 7,000 export-oriented companies since 2008 on the stronger dollar, hundreds of thousands of employees,” McKay said last week in Toronto. “A lot of that was a permanent loss to Mexico, U.S. offshore capability and obviously China.”
Canada’s gross domestic product may expand by 2 per cent this year and could increase to 2.5 per cent next year, McKay said. That compares with U.S. economic growth forecasts of 2.5 per cent and 2.8 per cent, respectively, according to data compiled by Bloomberg.
“We should have come out of this a lot stronger than we have, given the strength of the U.S. economy,” McKay, 51, said in an interview. “We’re going through a fundamental restructuring of our export capabilities and our export companies.”
Finding new export markets takes time and that’s slowed recovery, McKay said. Falling energy prices have also had an impact, especially on the oil-driven economy of Alberta, said McKay, who visited Calgary earlier in the month.
“It feels pretty grim, there’s a lot of uncertainty in the marketplace around the price of oil,” McKay said of his visit with business leaders. Still, despite cuts by energy companies ranging from capital expenditures to jobs, McKay sees the situation as manageable as oil prices climb higher.
“There is going to be a modest recovery in the price of oil,” McKay said. “We’re calling for oil prices a year somewhere in the neighborhood of $ 70.”
Bright spots include British Columbia, with a “fairly strong” economy and balanced growth fueled by exports to Asia and the U.S., and more tourism due to the weaker Canadian dollar relative to the U.S. greenback, he said.
The country’s housing market is “on solid ground,” McKay said, with supply and demand based on fundamental growth in the marketplace and not mimicking the U.S. circumstances that lead to the financial crisis in 2008.
“What got the U.S. into trouble obviously was artificial demand and excess supply, and a correction happening,” McKay said. “We just don’t see that in Canada.”