Federal government should consider boosting immigration and economic competitiveness
The Canadian government should take heed of the prevailing low interest rates in the global scale, and the potential weaknesses that these introduce to the national economy and financial system.
“Interest rates have been very low for a very long time. Perhaps too long,” Canadian Imperial Bank of Commerce CEO Victor Dodig said in a speech earlier this week, as quoted by Bloomberg.
“The same low-rate environment that helped the world recover from the crisis of 2008 is now infusing risk into the global financial system -- and could generate headwinds for us.”
Among the issues that Dodig highlighted was debt, and the accompanying phenomenon of developing countries borrowing in U.S. dollars to finance growth in a low-interest rate global environment.
“This has caused turmoil as equities in some emerging markets have fallen sharply as investors flee to less risky alternatives,” the CEO explained.
“Today, the global economy is strong,” Dodig added. “Our national economy is doing well. But there are economic storm clouds ahead, which suggest for both caution and action."
Read more: Interest rate hikes might harm the economy over time
Canada can defend itself from these risks by improving immigration, which can help boost its economic robustness.
Another way to make the national economy more competitive is to establish clearer foreign investment rules and permit companies to “expense capital investments with a one-year period.” Canada should also consider investing further in infrastructure and removing current obstructions to trade between provinces.
Dodig noted that Canada also needs to magnetize greater sums of foreign investment, as this volume has been weakened somewhat in recent years due to internal issues like the debate over the Trans Mountain Pipeline.
“The ongoing conflict broadcast to the world, sends a message of uncertainty.”
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