Will Canadian Economy, ETF Ride Wave Of Optimism?

Canada tries to hold onto optimistic news as its economy and related exchange traded funds (ETFs) are caught up in the doldrums.

Canadian Prime Minister Stephen Harper advocated a positive economic outlook after announcing $14 billion in new spending for infrastructure and energy, according to CTV. There will also be $2.3 billion investment that will include upgrading the drinking water system.

It is seen that the Prime Minister’s optimism is just and will head off any unnecessary panic that would undermine consumer and business confidence, reports Paul Weinberg for Inter Press Service.

But there are others who see a more grim outlook. Parliamentary Budget Officer Kevin Page calculated a 385,000 job loss by July and a 15.3% drop in gross national income in the last quarter of 2008. Recent forecasts have Canada’s economy contracting by 2.5%.

David Dodge, former chair of the Bank of Canada, thinks that an economic rebound in Canada may not occur until levels of output and rates of growth return, which may not stabilize until 2013. Canadian banks were well-regulated in the past and accordingly did not sustain bankruptcies seen elsewhere.

Canada’s economy is very much tied to that of the U.S. economy’s and is also vulnerable to the whims of Washington. It is thought that U.S. export-related recovery brought on by domestic public investments and depreciated U.S. dollar could hurt Canada’s ability to trade with the United States.

• iShares MSCI Canada Index (EWC): down 7.1% year-to-date

Subscribe by RSS Subscribe by Email