![Global economy: An uncertain world](https://www.benefitscanada.com/wp-content/uploads/sites/7/2011/11/global-risk-dice-puzzle.jpg)
Four years after the credit crisis, Europe still remains in fiscal disrepair. “Europe is now the poster child for risk,” said Derek Burleton, vice-president and deputy chief economist with TD Economics, speaking yesterday at TD Asset Management’s Sharing of Knowledge Learning Series in Toronto.
Earlier in the year, Europe experienced a “period of tranquility,” said Burleton, but the unknown is Greece. With the country’s recent elections, it’s anyone’s guess if it will exit the eurozone. Though Burleton is confident that the European recession should end by this year, he said that countries will still experience big shrinkages in GDP.
Emerging markets
On the emerging market front, Burleton said growth is slowing, particularly in China. “We saw a robust growth [in China] until recently,” he said. But again, he said that this growth depends on what happens in the eurozone. Whatever does happen, Burleton has forecast about 7.5% growth for China.
U.S.
Stateside, the economy is showing some signs of improvement. Employment numbers have been up (with about 250,000 new jobs per month), and credit is beginning to flow.
The unemployment rate is high, but Burleton said forecasters are beginning to see a decline. And the auto sector is flourishing, as demand for autos is doing well.
On the housing front, sales are improving and foreclosures are coming down, but the housing market still faces huge structural problems. “We still need to see it recover,” Burleton said.
Canada
The economy north of the 49th has fared better. “Canada has done very well, and we’ve seen better growth [about 3.3%] than anywhere else,” said Burleton. While continued growth from Canada will come from exports, oil price will still remain a competitive challenge.
And, as the Canadian government continues to focus on fighting the deficit, the feds won’t be a source of growth, and interest rates will continue to be low, said Burleton. Consumer spending, on the other hand, will be moderate—about 2% to 2.5%.
As for the housing market, Burleton said that Canada needs a home price correction in the next few years but that it won’t happen this year.
Overall, the outlook for Canada is modest—slower growth for longer. Alberta will have the best forecasted growth, at 3.2% to 3.6%, followed closely by Saskatchewan at 3% to 3.1%. The rest of the provinces are forecasted to hover between 2% and 2.3% growth.