OTTAWA, March 18, 2011 /Canada NewsWire/ - It is in Canada's interest to continue to act responsibly, even though other countries are behaving irresponsibly in terms of their macroeconomic policies, The Conference Board of Canada argues in a publication released today.
"Being a responsible nation in a turbulent world can be a burden," said Glen Hodgson, Senior Vice-President and Chief Economist. "Yet, Canada needs to remain a good global citizen, and encourage others to do the same. As long as public debt in other major countries remains high and global imbalances persist, we will have to roll with the punches."
The global economic system has been hit by new shocks, like political events in the Middle East and North Africa, and the horrific natural disaster in Japan, at a time when the deep structural weaknesses and imbalances among developed countries are becoming more apparent.
Canada has a respected voice in forums such as the G7/8 and G20, which it can use to encourage other countries to implement policies that consider the collective interests of the global community, rather than domestic self-interest.
After gaining ground on the world's leading economies during the recession, Canada is returning to a middle-of-the-pack ranking in the Conference Board's How Canada Performs. Canada is forecast to rank ninth in the Economy category in 2011, after moving up to sixth in both 2008 and 2009. Despite this slippage, Canada retains strong macroeconomic fundamentals, such as relatively modest public debt burdens and low inflation.
At home, the Conference Board's consistent message has been that federal and provincial governments should implement credible plans to restore fiscal balance within a reasonable time frame. Within the next fiscal year, they should use their budgets to detail plans to cap their debt-to-gross domestic product (GDP) ratio - and then to reduce it. Price stability should resume being the primary objective of monetary policy. And businesses will have to continue to adjust to a Canadian dollar at or above parity, since the forces that are driving its strength are not going to abate soon.
The publication, Oh Canada: The Burden of Being a Responsible Nation in a Turbulent World, is available to Conference Board subscribers or for purchase at www.e-library.ca