The Economist highlights Canada's economic strength

By Derek Abma, Financial Post The Star Phoenix

 

The Economist, a prestigious international economics and political magazine, is once again turning its attention to Canada, this time pointing out how well the economy here has survived and recovered from the recent global economic crisis.

 

In this week's edition, the magazine profiles Canada in both an editorial and article, calling this country "the least-bad rich-world economy."

 

"As they contemplate high unemployment, foreclosed homes, shrivelled house prices and the arrogant follies of their investment bankers, Americans may cast envious glances across their northern border," the editorial says.

 

"When Stephen Harper, the prime minister, hosts the get-togethers of the G8 and G20 countries next month, he will be able to boast to his visitors that his country's economy is set to perform better than that of any other rich country this year."

 

The Economist notes that the Canadian economy managed to suffer "only a mild recession and is now well into a solid recovery," as the housing market and banking sector avoided the kinds of collapses seen in other countries, such as the United States.

 

For Canada's economic success, The Economist gives much of the credit to the country's financial regulatory environment, which includes requirements for high levels of capital reserves at banks and places relatively strict mortgage rules on individuals.

 

The Economist points out the deficit-fighting measures Canada went through in the 1990s, which put it in a position to "easily afford the modest stimulus it applied in 2008" to fight the economic downturn.

 

It notes that government debt in Canada is less than 36 per cent of GDP, which is about half of the U.S. level.

 

Such praise for Canada from the widely read magazine contrasts with the ridicule it dispensed earlier this year after the government prorogued Parliament. Harper claimed it was so the government could "re-calibrate" its agenda. Opposition parties said the government was avoiding controversial issues, such as questions surrounding how much Canadian officials knew about the torture of military detainees in Afghanistan.

 

"Canada cannot afford a part-time Parliament that sits only at the prime minister's pleasure," the publication said in an editorial in January.

 

In 2003, the same publication praised Canada, under the leadership of Liberal prime minister Jean Chretien, for being "cool" in relation to, among other things, its stance on decriminalizing marijuana, a direction that has since been stamped out by the Conservatives under Harper.