Each day TFO Canada publishes a sample of trade news on the Canadian import market along with any new, updated or changed regulations and legislations regarding international trade; countries in which TFO Canada offers services and on the export sectors which it promotes.
Consumer Confidence to Lift EconomyTuesday, February 23, 2010 > 12:11:43
Consumer Confidence to Lift Economy
What kind of economy is waiting for us in 2010? That is the question being asked of 15 economists from major Canadian banks by Finance Minister Jim Flaherty.
Growth, they answered. Great news.
It seems that the country’s economists have been more optimistic in recent months. This year will be more prosperous than originally thought, which is exactly the message the economists delivered to Flaherty to help him prepare the federal government’s annual budget. The recession is over. The economy should grow by 2.6% in 2010, a slightly higher number than the 2.3% growth that had been predicted in September.
The anticipated growth, however, will depend on the mood of consumers on which the economists are basing their predictions.
After a tough 2009, Canadians seem to have regained confidence in the future; for the second month in a row, January saw the Conference Board of Canada’s Consumer Price Index climb to 96.6. This marks a return to normal, with 2002’s score of 100 considered the reference point. The number is also twice as high as last year, when the index hit 56.2.
The explanation: Canadians have been less pessimistic of late regarding their personal finances and employment stability, according to the results of a survey linked to the index.
Fortunately, this tendency should continue, according to Conference Board economists. That’s good news, as consumer spending is very important to the economy. In fact, consumer spending accounts for the majority of the country’s economic activity, or 59% of the country’s gross domestic product (GDP), according to Statistics Canada.
This new-found confidence of Canadians should keep cash registers busy in the country. Many economists with the banks have predicted a 3% increase in consumer spending. The Conference Board’s prediction sits lower at 1.9%.
But why are consumers beginning to loosen their purse strings? Because the market is expected to create jobs in 2010. After a tough 2009 that saw the number of jobs drop by 1.6%, some economists are predicted a 0.6% rise – small, but encouraging – in the number of jobs in Canada in 2010.