Are Tougher Times Ahead?

According to the Organisation for Economic Co-operation and Development (OECD), Canada’s economy will continue to shrink for the next three quarters. In total for 2009 the Canadian economy could shrink by 0.5 percent. They suggest that the Bank of Canada still has room to manoeuvre their lending rate to help cope with deepening recessions. Since December of 2007, the Bank of Canada has cut its rates by 2.25% 

More signs of toughing times come amidst, Finance Minister, Jim Flaherty’s comments at a luncheon in Toronto to the Canadian Council for Public-Private Partnerships, where he reflected Prime Minster Stephen Harper’s view that “an unprecedented time of turbulence in the financial markets” and said there is a “crisis in the world economy historic in importance.” Minister Flaherty also said that Ottawa would increase spending to help stimulate the economy but would not give a specific time frame as to when they would release these plans.  It is expected that he will announce the spending plan during the next Federal Budget targeted to be tabled sometime in the New Year. Reports indicate that the Conservatives may be forced to deliver their budget before the normal February/March time frame.

Do you think that increased spending and decreasing interest rates will help stimulate the economy? Let us know – post a Blog reply below.