LEX “If there was ever a time to put away that legendary Canadian modesty, it is now,” crowed Stephen Harper last month. Canada’s prime minister has his tail up. According to estimates by the Organisation for Economic Co-operation and Development, Canada’s net debt position next year versus output will be less than half the G7 average. Its banks are also in reasonable shape. The ratio of deposits to total liabilities, for example, is a high 70 per cent. In addition, writedowns have been modest and no Canadian bank has yet needed government capital.
Doing well on a relative basis is one thing. At home, however, Canada’s voters are shrieking at an economy that seems to be collapsing around their ears. Output growth dropped 2.4 per cent year on year in January. Consumption is weak and exports have fallen for the longest quarterly stretch since the 1940s. Having more than 7 per cent of output tied to the automobile industry does not help. Nor does the collapse in commodity and energy prices. But high levels of consumer debt and January’s 40 per cent year-on-year fall in existing home sales suggests an economy little different to other deficit nations.
