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When Mohamad Sjamaun arrived in Toronto from Jakarta last year, he had high hopes of being able to use his skills and extensive managerial experience to land a professional job to be able to support his wife and four children.
He has a BA in engineering and added a masters degree in management, which led to 12 years of executive roles in technical sales and project co-ordinator for the Indonesian operations of Hewlett-Packard Co.
Since arriving in Canada, he has applied for managerial jobs at more than 100 companies without even getting a nibble. “I sent in resumes and cover letters about my experience and there was no follow up. “I was using up all my savings and couldn’t find any kind of work,” he says. To make ends meet he took a low-paying clerical job for a scrap metal company on two month contracts.
“Obviously I want to find something more permanent that uses my skills,” he says, such as a job as project co-ordinator or sales or technology manager. But to do that he’s realized he has to reinvent himself for the realities of the Canadian workplace.
It’s a reality the majority of skilled immigrants need to face, career experts say.
“Many immigrants face a job market that doesn’t know how to assess or use their skills, says Nora Priestly, project manager for a new Internationally Educated Professionals Bridging Program at York University. While similar programs have been in place to help immigrants in regulated professions such as engineering, medicine and nursing, this program aims to help immigrants with managerial experience use get into leadership roles.
With 67 students who got into the program by word of mouth and advertisements. They all have university degrees, and 57 per cent have masters or higher. The majority of the students have five or more years of experience in their professional fields, accounting marketing, public policy, finance and management.
All of them are underemployed or unemployed not working at all. all are actively looking for a job. Many are in “survival jobs” working in shops, security guards, driving cabs and working as volunteers in social programs that have only a modest pay attached to them, Ms. Priestly says.
Through York’s program Mr. Sjamaun has taken courses to upgrade his technical skills and even though he speaks fluent English, classes to improve business language skills. He also was teamed up with a volunteer mentor, who has helped him make industry contacts.
And it is bring results: “Networking landed my first interview with a potential employer last week,” he says. “I didn’t get the job, but it shows I am heading in the right direction.”
Why it’s important
“Canada will need more immigrants if the labour force is to grow and remain vibrant,” concludes a Conference Board of Canada study released this month (July). A low birth rate in Canada means that there will be fewer workers entering the job force to replace those retiring.
The Conference Board’s forecast assumes that immigration levels will rise to about 350,000 annually by 2030, up from about 252,000 in 2009. To put their skills to use, the study recommends revising federal immigration policies to:
1. Increase the weight given to immigrant’s skills that are needed in the Canadian market;
2. Improve recognition of foreign educational and professional credentials.
3. Increase involvement of employers in the process of getting immigrants into the labour force.
4. Streamline the immigration system.
Roadblocks immigrants face:
Lack of “Canadian experience.” Employers often want a track record to show that employees can perform up to expectations in the Canadian workplace.
Unfamiliar degrees or certification. Employers can’t be sure that foreign credentials have the same qualifications as those granted in Canada.
Language barriers. Even those who speak English or French will be unfamiliar with specific terms and phrases used in Canadian businesses
Lack of industry knowledge. Legal, financial and regulatory issues specific to Canada will require retraining.
Lack of connections. A majority of jobs are found through networking and knowledge of industries, which is where mentoring can help.
Source: York University, Bridging Internationally Educated Professionals program
Number of distinct ethnic groups represented in Canada’s population
Percentage of Canada’s population that are visible minorities
Percentage of all Canadian managers who are from visible minorities
Percentage of senior managers in large Canadian companies who are visible minorities
Percentage of foreign-educated immigrants in Canada who worked in occupations that match their qualifications; compared to 62 per cent of Canadian-born and educated professionals
Percentage of visible minority leaders and managers in the Greater Toronto Area
Percentage of Toronto’s population that is visible minorities
Percentage of Canadian employers who don’t have a diversity program
Sources: Statistics Canada.; the Canadian Institute of Chartered Accountants; Ryerson University‘s Diversity Institute for DiverseCity: The Greater Toronto Leadership Project; Globe and Mail web poll with 3,214 responses
Image by Mikey G Ottawa via Flickr
Canada’s merchandise exports declined one per cent while imports fell 2.2 in April.
Statistics Canada says the declines were the result of lower prices.
The agency reports export and import volumes rose for a third straight month, though at a slower pace than in the previous two months.
Canada’s trade balance with the world went to a surplus of $175-million in April from a deficit of $236-million in March.
Exports decreased to $32.9-billion in April from $33.3-billion in March.
Export prices fell 1.4 per cent while volumes grew 0.4.
Industrial goods and materials accounted for three-quarters of the decline in exports. Widespread gains in exports of machinery and equipment moderated the overall decrease.
Following two months of growth, imports declined from $33.5-billion in March to $32.8-billion in April, as import prices fell 2.4 per cent and volumes grew 0.2 per cent.
Statscan says the decrease in overall imports in April reflected declines in industrial goods and materials and, to a lesser extent, in other consumer goods, and machinery and equipment.
Exports to the United States rose 0.7 per cent while imports grew 0.9. As a result, Canada’s trade surplus with the United States remained at $3.8-billion in April.
Exports to countries other than the United States declined 5.5 per cent, largely the result of a 23.4 per cent decline in exports to the European Union. Imports fell seven per cent, led by decreases in precious metals from the European Union.
Consequently, Canada’s trade deficit with countries other than the United States narrowed to $3.6-billion in April from $4-billion in March.
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The world’s biggest private-sector bond investor says the U.S. Federal Reserve Board is doing about all it can reasonably do to backstop the struggling U.S. economy and stave off deflation. But America’s government, despite $1-trillion (U.S.) of stimulus spending, isn’t doing nearly enough.
And until it comes up with some new solutions, Bill Gross says, his investment eyes will continue to wander to greener pastures – including Canada.
“We’re much more in awe of countries such as Canada, with a decently balanced budget, and with low debt-to-GDP, and with financial institutions that have been solvent and sound and conservative in their lending, and that have something to export,” said Mr. Gross, founder and co-chief investment officer of Pacific Investment Management Co. LLC (commonly known as PIMCO), which oversees more than $1.1-trillion (U.S.) in investment assets, primarily in the bond markets.
“North of the border has become, while not our favourite destination, certainly a preferable destination to what we see in the United States.”
Mr. Gross declined to say whether his bearish views are translating into a reduction in PIMCO’s exposure to U.S. government bonds – indeed, as recently as June his funds’ holdings of Treasuries were on the rise and at eight-month highs. However, he has been raising his exposure in Canadian and Brazilian government bonds, and his favoured investment strategies right now are outside the U.S. market.
“Investors, whether it’s equity or bonds, should be oriented toward growth and stability, and, yes, a political foundation that promotes both.
“I’ve mentioned Brazil, and, yes, Canada’s a good place. Even Mexico has better initial conditions in terms of low debt than the United, States, but admittedly the stability issues and politics are a question. But in general, the developing world is in much better position than the developed world, so that’s where dollars should go.”
The federal Conservative government has acquiesced to provincial demands — including from Alberta — to ease its restrictions on the number of immigrants that can permanently reside in the provinces each year.
Ottawa controls the number of permanent immigrants that can annually settle across Canada through the provincial nominee program, with the current cap at 4,400 in Alberta — well short of the 5,000 Alberta had requested this year.
Wild Rose Country and other western provinces have been lobbying the Harper government for months to scrap its plans to impose a lower cap on the number of immigrants arriving through the nominee program. Rather, the provinces have been urging Ottawa to ratchet up the number of workers they can nominate to the federal government to bring to their jurisdictions to fill permanent jobs.
Federal officials initially indicated in June the provinces wouldn’t receive as many nominees as hoped, but announced Tuesday they will increase the numbers after reviewing their case loads and immigration targets for the year.
The additional nominees are critical to sustaining the short-term economic turnaround as well as long-term growth, said Alberta Immigration Minister Thomas Lukaszuk.
” It would be a move in the right direction,” Lukaszuk said about the federal decision. “We will be seeing more and more permanent labour shortages. We have to look to immigration towards solving this problem.”
Lukaszuk said he believes the provincial nominee program is the best solution because immigrants can only apply if they have a guaranteed job that employers have shown cannot be filled by Alberta workers.
The approach ensures new immigrants landing in Alberta are paying taxes and contributing to society, rather than tapping already strained social assistance programs.
“We believe we should have some degree of determination of what immigrants we bring here,” he said.
Federal Immigration Minister Jason Kenney is travelling in Europe and wasn’t available for comment.
But Alykhan Velshi, the minister’s director of communications, said the federal government has heard the provinces’ concerns and will increase the numbers beyond what was originally promised earlier this year.
Alberta will now receive 5,000 provincial nominees this year (up from the 4,400 initially approved), which is a large increase from the 4,200 last year and 2,800 two years ago. B.C. will now receive 3,500 provincial nominees (an increase from the promised 3,200); Saskatchewan has been allocated 4,000 (up from 3,700) and Manitoba will get 5,000 (increased from 4,600).
Alberta received the largest increase of any of the provinces, Velshi noted, which reflects Kenney’s recognition of how important the program is to the Alberta economy.
Alberta and the other provinces were initially promised a smaller number because the federal government is trying to sharply improve processing wait times for immigrants, temporary foreign workers and foreign students. It also must balance the provincial nominees with the number of immigrants allowed through the Federal Skilled Worker Program (which assess applicants based on a points system), he said.
Citizenship and Immigration Canada initially set a target of allowing between 240,000 and 265,000 immigrants into the country this year, with the agency usually hitting the midpoint. However, CIC now expects to reach the top end of its target, which is helping accommodate more provincial nominees.
“There are other categories that we have to pay attention to. There are trade-offs,” Velshi said.
Back in Alberta, Lukaszuk noted the 5,000 is just a start and still doesn’t address Alberta’s long-term economic and immigration needs.
Lukaszuk favours the permanent provincial nominee program over attracting temporary foreign workers — which reached about 60,000 in the province during the boom — who can often be sent back and forth between Alberta and their home country depending on demand.
“I’m not a big fan of shipping workers in and out, in and out,” he said.
Social agencies and the food services industry welcomed the federal government’s decision to increase the number of provincial nominees.
Despite the higher unemployment rates in Canada over the past two years, there’s still not enough workers to fill jobs in many different sectors, they noted.
” We’re looking at a problem that is long term,” said Enayat Aminzadah, director of operations and resource development with Immigrant Services Calgary. “It’s a great way to strengthen our workforce.”
The additional immigrants shouldn’t be seen as a “threat” to Albertans also looking for a job, he stressed, because there’s clearly a need for the workers both now and in the coming years. Also, nominees are only approved if they have a permanent job offer, Aminzadah said.
The Canadian Restaurant and Foodservices Association applauded the federal decision, saying their sector desperately needs additional workers across the western provinces.
“It’s a big issue and a lot of our members are concerned,” said Mark von Schellwitz, western vice-president with the CRFA. “That is really welcome news.”
The Canadian Society of Immigration Consultants (CSIC) gave the public a glimpse at its internal operations today through a video presentation that puts a face to the organization, its departments and its staff.
“CSIC embraces transparency in our governance, and now we’re going one step further to give the public and our members a look at our internal operations,” said CSIC Chair Nigel Thomson.
The video shows CSIC’s small, diverse staff, which has accomplished great things by working together with limited resources. Working together in many different roles, CSIC’s registration, education, complaints and discipline, legal, compliance, member practice aide, finance and administration, policy, communications and intelligence departments have been highly effective in pursuing CSIC’s mandate to protect consumers of immigration consulting services.
“Since 2004, CSIC has shut out more than 800 agents, and disciplined more than 225 consultants. These numbers demonstrate that CSIC is an effective regulatory body that acts in the public interest. With this video we’re giving the public an idea of the day-to-day operations that help CSIC perform its vital regulatory activities,” said Thomson.
BY ALISON RAMSEY
Studies in both the United States and Canada have shown that job creation increases and the economy improves as the number of immigrants swells. Immigrants are, as a group, better educated than Canadians and since 1967, when the government introduced its point system, the selection process favours those with marketable skills.
Is there a market here for skilled labour? Actually, Canada is seeing signs of worker shortages in several professions – including engineers, doctors and nurses, to name a few. Added to this is the fact that the population in some provinces is shrinking, and employers are having difficulty filling their rosters with skilled help. Paul Darby, director of the Conference Board of Canada, estimates a shortfall of 3 million skilled workers by the year 2020.
Boosting immigration could be a very effective way of helping to ease the shortage, but there are other impediments.
Immigrants often have difficulty working in their fields after they arrive. On average, it takes 10 years for immigrants to get hired in jobs for which they have skills and, even then, they are not necessarily working at the skill level to which they have been trained. In March, Jeffrey Reitz of University of Toronto’s Centre for Industrial Relations, released a study showing that immigrants whose skills are underused cost the Canadian economy $2.4 billion yearly. He also estimated that they are underpaid to the tune of $12.6 billion every year. No type of job is exempt. “We used comparisons across the labour force,” says Reitz.
Some organizations are answering the growing demand by helping immigrants become licensed to work in Canada after they arrive. The Ontario Ministry of Education, for example, is spending $12 million over three years to help get more foreign-trained medical professionals – nurses, doctors and pharmacists – into their professions. The money is given to local professionals associations to recruit and retain personnel. Another $3.5 million is being spent by the province to train foreign professionals to ensure they meet Canadian standards.
Yet, at the same time, experts are worried that the flow of immigrants is about to dry up, thanks to legislation coming into effect in June that changes the rules for people hoping to enter the county. Reitz says the proposed guidelines constitute a much more stringent selection criteria. He theorizes that the government hopes to eliminate a backlog of applicants, which numbers about 660,000 people. The Association of Immigration Counsel of Canada has run dozens of scenarios to determine how many of the 660,000 would be eligible under the new guidelines. “We anticipate that only five to eight percent will be allowed in,” he says. The problem, adds Reitz, is when the backlog is gone but the need for skilled workers remains.
Growing demand for skilled labour is not limited to Canada. In India and China, for instance, the high-tech industry is developing. Workers from those countries who might have had to emigrate to ply their job skills in the past, now have a better chance of finding work at home. Even after skilled workers arrive, it can be a challenge to keep them here: the United States is also eager to attract the best and the brightest.
According to a survey by Canada’s Federation of Independent Business, one out of 20 jobs remains unfilled because of an inability to find suitably skilled labour. This represents about 250,000 to 300,000 vacant jobs in small- and medium-sized businesses alone. The lack is not just in professions that require higher education. The worst off are employers looking for skilled construction workers, who reported 7.7 percent of jobs went unfilled. They are followed closely by the business services and agriculture sectors. Hospitals and the personal service sector ranked tenth at 3.8 percent.
The need is greatest in Manitoba, Ontario and Alberta.
The number of Chinese investors granted permanent residency in Canada has doubled in two years.
Ottawa has now halted all applications to its federal immigrant investor programme while it consults on plans to double the funds needed to obtain a visa.
Applicants are still allowed to apply to a scheme run by the province of Quebec, however,
And at seminars run by visa consultancy firms in China, advisers are encouraging people to apply for the scheme before Quebec also doubles its minimum requirements to match the federal government’s proposals.
Cash and experience
On a rainy Saturday afternoon, in a conference room at a five-star Shanghai hotel, more than 30 potential “investor applicants” arrive to hear how they might be able to exchange their cash for a foreign passport.
Many are in their 30s. There are several young couples. Most are professionals. Few are dressed smartly. They appear to be a pretty average cross-section of Shanghai’s moneyed middle class.
They are shown a video that the visa company has made to promote Canada, and the country’s visa application service.
“You don’t have to worry about integrating,” the video’s commentary declares. “You don’t even need to speak English.”
Then the advisers go through the detail.
The Quebec scheme requires applicants to show they have a net worth of C$800,000 (US$776,000; £502,000) and they must invest up to C$400,000.
They also need to show they have had two years’ experience in management.
Different requirements That’s considerably cheaper, they point out, than the UK, which requires investors to invest £1m ($1.5m) for five years.
There are pros and cons of each of the countries’ schemes.
Canada’s applications currently take about two-and-a-half years, but the financial requirements are the lowest in the world.
The United States requires applicants to invest up to $1m (£646,000) in a business that creates at least 10 new jobs. Applications take up to one-and-a-half years.
The UK’s application process is the quickest. It can be completed in just three months, according to the visa consultants at the seminar, and there is no interview.
But it is also the most costly.
“Usually, the applicants are business owners or senior managers,” explains Vincent Chen, senior consultant for the Visa Consulting Group.
“The average age is 40 to 45, but it’s getting younger.”
Easily achievable Canada has not changed its “immigrant investor” programme requirements since 1991.
“Back then, C$800,000 was a huge amount,” Mr Chen says.
“But now, with the increases in property prices in cities like Shanghai, people don’t think it’s that hard to achieve.
“That’s why you’ve seen the numbers granted permanent residency have doubled.”
Other factors are also at work here.
Increasingly, those who come to the seminars have friends who have already emigrated.
Reasons to move
David Lu, 38, a manager in a telecommunications company, has come to the seminar to find out more about how to apply to move to Canada.
At the end of the session he starts filling in the forms eagerly.
He has positive reasons to move. Some of his relatives already live in Canada. And during holidays there he has enjoyed the lower pollution levels there.
Also, he says, the Canadians are “a lot more relaxed” than the Chinese.
There are other reasons though why he wants to leave China.
“People hate you [here] if you have money, and the rich bully the poor,” he says.
“Another issue for me is health care,” he adds.
“I don’t think anyone interested in moving abroad would worry about the costs. We want their better quality medical care.”
Fabio Xu, 30, runs a paint company in Shanghai.
He says he wants to move to the US “because of the better medical care there, and better educational opportunities for my child”.
“In China, all my money goes on my mortgage, food, clothing and travel,” he says, “but in the States there’s generally more freedom. I would be able to develop myself more creatively and get more out of life.”
Some Chinese academics worry that China is losing its brightest and most able citizens, as well as huge amounts of money.
Last year 1,823 investors were granted citizenship in Canada under the immigrant investor programme.
Even if they had only invested the minimum amount required, that would mean almost US$700m had been taken out of the country.
“China is losing the talent it really needs,” says Dr Wang Huiyao, the director general of the Centre for China and Globalisation.
“As China tries to develop its economy and change it from ‘made in China’ to ‘created in China’, it needs these people to build the country.”
In touch with China Dr Wang believes many people want a foreign passport because it is so hard to travel freely around the world on Chinese documents.
Indeed, one woman at the seminar is anxious to know how quickly she could get her Canadian passport, so she could return home to China.
For her it appears the motivation is not to get a new home abroad, but to obtain a passport that might make life more convenient.
A Western diplomat in Shanghai offers another explanation for the increase in these kinds of visa applications.
The internet, he says, means you can live abroad, but never leave China.
“You can wake up in the morning and browse the People’s Daily online over breakfast. You can trade your stocks on the Shanghai exchange with the click of a mouse,” he says.
“You can chat all day to relatives for free on Skype, or run your business remotely.”
His point is that emigration is no longer necessarily the emotional wrench that it once was for people.
The need to assimilate in their adopted country for practical reasons is not as great as it once was – which in itself could yet pose its own challenges for Western societies.
By DIDI KIRSTEN TATLOW
Published: August 5, 2010
BEIJING — “They’re all millionaires. They’ve made it,” said Mikael Charette of the thousands of wealthy Chinese — his clients — who apply to emigrate to Canada every year on that country’s investment immigration program.
As part of his job, Mr. Charette, a lawyer from Montreal, scrutinizes clients’ financial records. Back in 2005, when he began working at Harvey Law Group in Beijing, he was struck by how often a family’s wealth began with the transfer of the assets of state-owned enterprises to private ownership in the 1990s. Over the course of about eight years, he estimates, those factories became fully profitable.
“Now, I look back over a decade of records, and I see that the factory is running itself. The money of the family is in the second generation, and the children are often already overseas-educated, and they, too, own real estate here,” he said.
But regardless of how wealthy they become, China’s new rich simply don’t feel secure.
“I’ve had rich businessmen say to me, ‘You can be a tiger, but there is always a hunter somewhere,”’ he said.
So they come to Mr. Charette, who specializes in investment immigration to his home province of Quebec. Or they go to other lawyers dealing in immigration to major destinations like the United States, Australia, Singapore, New Zealand and Hong Kong.
Unsolicited text messages from immigration firms have become a standard feature of life for Beijing’s upper-middle classes.
“Zero-risk emigration to America: Invest in an Idaho gold mine. For the first time in Beijing the governor himself will explain how, officially,” ran one, supplying a time and date for the meeting. “Emigrate to Australia for $200,000, 95 percent success rate, free education, generous welfare,” ran another.
In just over three decades, China has gone from being one of the poorest countries in the world to its third-biggest economy. Per capita gross domestic product in 1975 was $410. In 2009, it was $6,567, according to the World Bank.
The Hurun Rich List, based in Shanghai, says there are now 875,000 known dollar millionaires in China, an increase of 6.1 percent from a year ago.
Yet even as China grows richer, the number of its rich choosing to emigrate is rising. Many want to maintain two homes, merging their money-making abilities in China with what they perceive as the greater security and ease of international travel offered by a foreign passport or permanent residency.
Last year, for the first time, Chinese citizens became the largest group of immigrants to Australia, displacing the traditional sources of Britain and New Zealand. From July to December 2009, 13,371 Chinese became “permanent additions” (gaining or entitled to permanent residency) to Australia, overtaking Britain’s 13,037 and New Zealand’s 7,342.
While most immigrants are admitted on the basis of sought-after skills or to reunite families, investment immigration, in which applicants make a minimum financial investment or create jobs in their destination, is also booming. So much so that Canada, excluding Quebec, temporarily halted its program in June in order to double the amount that would-be immigrants must invest to qualify. Whereas before applicants required a net worth of 800,000 Canadian dollars, or about $790,000, and a 400,000-dollar investment, in the future they will need 1.6 million dollars and an investment of 800,000 dollars.
“All these changes are because we are overloaded,” Mr. Charette said. “This is a huge, sophisticated market.”
The result for Mr. Charette has been gratifying — a surge in applications to Quebec. He estimates that the window of opportunity will last until October, when Quebec, too, will adjust its policies. In February, 233 people from around Asia applied to the program, he said. In June, the month the national program closed, the number was 519. Chinese constitute up to 85 percent of applicants.
On June 26, the same day the rest of Canada temporarily closed doors, Mr. Charette addressed about 40 would-be investment immigrants in Beijing. The middle-aged men and women listened intently, most taking notes.
The looming higher rates “shouldn’t be a problem for my friends,” murmured Ms. Hou, who did not want to be identified by her full name and said she was with the People’s Liberation Army, representing rich property developers from the city of Xinxiang, in the central province of Henan.
Would she also emigrate, if she could? “Yes,” she said immediately.
Why? After all, China’s living standard is rising as the rest of the world watches the apparent success of the so-called “Beijing Model” — authoritarian politics plus fast economic growth.
Her answers mirrored those given by other would-be emigrants: Better education for the children; a pollution-free environment; better medical care; a safer food supply; bigger and cheaper housing. Added up, they are what psychologists and sociologists dub Q.O.L., or quality of life issues, factors not measured by G.D.P.
“Education is very important,” offered another woman at the seminar. “It’s different over there, and it produces different values.”
Did the current economic crisis in the West put her off?
“Not really,” she said. “They talk about it in the papers here, but I don’t know if they’re telling the truth. I trust my friends, and my friends say things aren’t that bad.”
Joy Xi emigrated to Canada nearly a decade ago. When I asked why people leave, despite rising prosperity in China, her answer was swift: “Sanlu,” the company notorious for producing melamine-laced milk powder that killed six babies and sickened hundreds of thousands more in 2008. Few believe the problem is over.
Also, said Ms. Xi, China is growing richer, but it’s also growing more unequal, and that makes the rich feel unsafe.
Summing up how many Chinese think, she cited a widespread saying: “Life in China is too risky. Consider carefully where you want to be reborn in your next life.”
Strategic advantages over many advanced economies increasingly well recognized
TORONTO, July 14 /CNW/ – Canada’s outperformance versus many advanced economies is creating “staying power” for the country’s growing popularity with foreign investors, notes a new report from CIBC World Markets Inc.
“Canada is increasingly on the lips and minds of international investors,” says Warren Lovely, government strategist with CIBC’s Macro Strategy group, fresh back from meetings with investors across the U.S. and Asia. “Those we’ve talked to are getting religion on Canada’s potential outperformance versus a growing list of advanced economies. Indeed, it’s hard to recall a time when the country possessed such relative, if not absolute, strength.”
In CIBC’s latest Global Positioning Strategy report, Mr. Lovely identifies a growing list of “strategic advantages” that are boosting interest in Canada and its weighting in global investment portfolios.
Central to Canada’s strong story is its fiscal advantage, says Mr. Lovely. He points first to Canada’s much smaller need for fiscal adjustments to stabilize debt ratios. “Canada’s provinces are not feeling the same heat as some U.S. states, are less prone to severe program cuts or increased revenue measures, and are therefore putting their regional economies at less risk.”
In addition, the revenue picture for Canada’s federal and provincial governments is also “brightening materially” with $15 billion in extra revenue projected for the year.
Mr. Lovely says the fiscal improvement will serve to reduce borrowing requirements and protect federal and provincial credit ratings. It also means less bond issuance from Ottawa which will “leave plenty of room in the long end for provincial and corporate issuers.”
Years of fiscal outperformance and surpluses in Canada have created
budgetary room to slash corporate taxes. This result combined with
important tax reforms have given Canada a growing advantage over
competing tax jurisdictions.
Canada has emerged as a growth leader in the developed world, with
the IMF the latest forecaster to see the country leading the G7 in
terms of average real GDP growth during 2010-11. While Canada's
growth rate is only modestly above that of the U.S., its indicators
of domestic economic health, such as employment, are substantially
Canada has a well-capitalized banking sector with a less dramatic
adjustment to regulation in store.
Canadian exporters have limited direct exposure to slow-growing
Europe and at the same time have had success in increasing exports to
the faster-growing BRIC region.
Healthy international and interprovincial migration, particularly in
western Canada has created less onerous demographic pressures which
in turn support a faster potential economic growth rate.
But Mr. Lovely also sees some challenges to Canada’s continuing outperformance. He notes that three quarters of Canada’s exports go south of the border, meaning a “U.S. slowdown will leave its mark on Canada.”
“Canadian and U.S. real GDP growth has never been more tightly correlated than during the past five years. So the end of an American inventory rebuilding process will sap demand for Canadian wares,” adds Mr. Lovely.
Other risks to Canada’s economic prospects include the impact of a continuing strong Canadian dollar on manufacturing, an overheated housing market and highly indebted household sector.
“Notwithstanding these challenges, Canadian governments are courting international investors from a position of strength, hardly beholden to foreign capital, but happy to take full advantage of a healthy appetite for Canadian fixed income product,” says Mr. Lovely. “The message is getting through, and there’s every reason to believe that today’s strong foreign investor interest in Canada will have staying power.”
The complete CIBC World Markets report is available at: http://research.cibcwm.com/economic_public/download/gps_jul10.pdf
CIBC World Markets Inc. is the corporate and investment banking arm of CIBC. To deliver on our mandate as a premier client-focused and Canadian-based wholesale bank, we provide a wide range of credit, capital markets, investment banking, merchant banking and research products and services to government, institutional, corporate and retail clients in Canada and in key markets around the world.