October 31, 2011
Canada number one? Are you sure they didn’t make a mistake?
JOHN CLINKARD
consulting economist, CanaData
For many years Canadians have looked over the border at the United States with a mixture of envy and disdain.
The envy seems to focus on higher temperatures (in the winter), generally lower prices for many goods and services (all year round), a stronger job market (reflected by a lower unemployment rate) and a generally better place to do business.
The disdain tends to centre on the U.S. political system, the very litigious nature of U.S. society and the relatively inefficient U.S. health care system.
Although the weather in both Florida and California is usually much nicer in the winter than in Canada, and cars and dishwashers are still cheaper in Buffalo than in Toronto, the fact that the U.S. unemployment rate has remained above nine per cent for the past five months while in Canada it has dropped from 7.4 to 7.1 per cent suggests that Canada’s economic climate is definitely better than that of the U.S.
Indeed, among the G7 group of countries, Canada has the third-lowest unemployment rate after Japan (4.3%) and Germany (6.9%).
The relative health of the Canadian economy was highlighted recently by Forbes Magazine which boosted Canada’s ranking from #4 to #1 in its annual assessment of the Best Countries for Business.
According to Forbes, Canada ranked among the top 20 countries based on 10 of the 11 criteria it uses to compare the overall climate for starting and operating a business.
These criteria include property rights, innovation, taxes, technology, corruption, red tape, investor protection and stock market performance.
In many respects the Forbes assessment is consistent with recent comments by the Bank of Canada’s Senior Deputy Governor Tiff Macklem that Canada “weathered the crisis better than most advanced economies<0x2026>.our banks are among the strongest in world, and we have the best fiscal situation among the G-7” (group of major developed countries).
Although it is comforting that the Bank of Canada has a positive, unsolicited “second opinion” with respect to the country’s current economic health, maintaining this ranking will clearly require significant monetary and fiscal discipline given Canada’s very large exposure to what has recently become a very hostile external economic environment.
John Clinkard has over 30 years’ experience as an economist in international, national and regional research and analysis with leading financial institutions and media outlets in Canada.
Data Source: Forbes.com/Chart: Reed Construction Data, CanaData
