For years I’ve bragged about Canada to my American-born wife, extolling the common-sense efficiency with which America’s northern neighbor is run. Now, I am afraid I might have to eat my words.
I just got my monthly deposit from Canada.gov, and I am reeling from the shock. The Canadian dollar is worth only 76.70 cents US. That’s the lowest exchange rate in more than a decade.
According to CBC News, the decline is due to plummeting oil prices. Crude is trading below $50 a barrel. And it seems that falling oil revenue is dragging Canada into a recession.
Statistics Canada recently reported that the country’s economy is shrinking, and major banks are forecasting further decline.
Indeed, a recent poll shows most Canadians believe the recession is already there. Fifty-eight per cent of respondents surveyed by Forum Research say Canada is in a recession right now, with only 29 per cent saying it isn’t.
But surely Canada’s economy is not based solely on oil? In that vast, under-populated country, every mineral known to man abounds, trees cover the landscape for miles on end, and there are mighty rivers everywhere. The cities are modern and pristine, and are home to some of the world’s most thriving corporations.
The government is remarkably stable in a volatile world, and the banking system is admirably reliable. Human rights are protected, and violent crime is rare.
On paper, Canada is an ideal haven for investment dollars. And you would think falling oil prices would benefit the country’s manufacturing industry and stimulate consumer spending, making up for the loss of oil dollars.
So what on earth is going on?
I blame the country’s swing to the right in recent years. The Harper government has been a disaster, adopting conservative policies imported from the US, putting all its economic eggs in the oil industry basket and implementing reckless tax cuts to pander to global corporations.
Writing in the Huffington Post this week, Jerry Diaz, president of Unifor Founding Convention, put it this way:
(The Canadian) government chose to forsake a more diversified, managed strategy to support innovation, investment, and exports across a broad range of value-adding industries. Instead it decided to just keep riding the oil price roller-coaster for as long as it could.
In short, this new recession, following several years of sub-par performance, is mostly self-inflicted. The government cannot evade responsibility for its decisions and actions.
Of course Harper and his cabinet are denying there’s an impending recession (illustration above). But I’m sure the people of Canada can by now see through their “spin.” I am betting that Canadian voters will remember the glory days of Pearson and Trudeau and vote for change in October.