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The Economic Meltdown of Canada - Essay Example

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This essay aims at determining facts that made Canada to evade the economic meltdown facilitated by the recent economic crisis. Different countries performed differently in their economies during the 2006 and 2011 global financial crisis. Some counties were never affected badly…
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The Economic Meltdown of Canada
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Download file to see previous pages Canada never suffered the 2008 – 2009 global economic crises and this was reflected in its domestic spending and its continued economic growth despite the global or international turbulence that affected many economies including other major economies including the United States (Gnos and Rochon, 2011; Pg. 91). It is noted that several factors led to the stabilization of the Canadian economy amid stemming from eurozone settling sovereign debt crisis. For instance, the Canadian federal government had fiscal plans that were made visible to the market. These plans were credible and they favored low borrowing costs. Moreover, during this period Canada had a sound and effective banking system that supported this economy during this time. It should be noted that the crisis never led to the bailout of any taxpayer during the 2008 – 2009 global economic crisis. It is also recorded that emerging economies had shifted their purchasing power to commodity exporter including Canada (Gnos and Rochon, 2011; Pg. 51). This was conducted through stronger currencies and higher export prices thereby strengthening Canada’s economy. Notably, the uncertainty due to global risk and the economic situation usually drag the financial market into a more confident business thereby improving the inverters confidence (Mishkin, 2007). These situations led to prolonged low-interest rates that were likely to push mortgage debts and prices of houses higher from what was considered already elevated levels for, most likely, the large cities. Canada always has policy credibility and strong institutions; however, for many years, it has pegged its economic growth mainly on capital inputs and increasing labor. Nonetheless, growth in its multifactor productivity (MFP) has declined and become weak within the past decade. Therefore, the Canadian macroeconomic development embarked on business and research development especially with the aim of developing the patently poor economic sectors. Some of the areas that help in stabilizing the macroeconomic sectors in Canada thereby helping it through the global crisis were its boost of innovative sectors that helped it to raise it MFP growth that was needed to help in sustaining then rising living standards particularly with an aging population (Mishkin, 2007). It is worth noting that the Canadian economy recovered relatively quickly from the 2008 – 2009 global economic crises. Notably, its recovery was quicker and this was pegged on its fiscal stimulus and timely monetary as well as high commodity price and sound financial system. Additionally, Canada has been enjoying substance low unemployment rates especially since the peak of the recession that is now nearing a long term average unemployment rates. Other factors that the Canadian economy enjoyed included structured rate OECD estimates, corporate profit margin that was leveled even before the recession, and real business investment. In addition, in late 2011 the economic expansion was boosted due to its soft patch experiences that were later reflected in early 2012 (Organization for Economic Co-Operation and Development, 2012; pg. 131). These experiences largely indicated temporary factors that could have not affected the economy. ...Download file to see next pagesRead More
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