BoC: CAD is hurting exports, recovery at very difficult stage

Canada's recovery from the pandemic is at a very difficult stage and a second wave of COVID-19 infections "could even deepen the economic hole", Bank of Canada Governor Tiff Macklem said on Tuesday.

Reuters reports

Macklem told the Greater Vancouver Board of Trade that Canada had to boost both exports and productivity to ensure the recovery from the coronavirus pandemic was sustainable.

"The economic recovery from the pandemic is at a very difficult stage. Near term, rising COVID-19 infections will dampen growth and could even deepen our economic hole," he said.

"Uncertainty is elevated, and the recovery is going to be long and choppy."

Key notes

Macklem says economic recovery from the pandemic is at a very difficult stage.

Macklem: In the near-term, rising covid-19 infections will dampen growth and "could even deepen our economic hole".

Macklem: Recent c$ appreciation is hurting competitiveness of Canadian exporters in US market.

Macklem: Canada must boost exports, productivity and business investment to ensure a sustainable recovery.

Macklem: Canadian exports and business investment could bounce back more quickly than they did after the global financial crisis.

Macklem: Since initial shutdowns last spring, trade has bounced back faster than many economists predicted.

Macklem: Recent positive news on vaccines provides some reassurance that more normal activities can resume sometime later in 2021.

Macklem: Disproportionate impact of the pandemic on trade in services has significant implications for Canada.

Macklem: Rapid rebound in goods exports is certainly encouraging.

Macklem: We need to develop new fast-growing markets for our products and new fast-growing products for our markets.

Macklem: Low rates and vaccine roll-out means this is a good time for firms to look at how they judge the rate of return on potential investment.

Macklem: Incoming US administration means Canadian schools and companies may have to fight harder to attract and retain talent.

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