Issue 54 Vol III, December 31, 2007

T H I S  O U R  N O R T H  A M E R I C A

What lies ahead for the Canadian Economy?
Khushwant Toor writes from Toronto

After 6 years of healthy growth, Canadian Prime Minister Stephen Harper expects Canadian economy to slow down in 2008. In a recent interview with the media at his residence in Ottawa, Harper carefully termed the expected slow down as, “more challenging” for the Canadian economy. This could have serious political and social consequences.

The Conservative Prime Minister who faces elections anytime in  2008, linked his expectation of slow down in Canadian economy largely with the economic uncertainty in the U.S. which is showing no signs of stabilizing any soon, other then just going deep in dumps, along with economic slow down in some other parts of the world.

The housing market plunged deeper into despair last month, with sales of new homes plummeting to their lowest level in more than 12 years. The slump worsened even more than most analysts feared, heightening fears that the country might be thrust into a recession. New-home sales tumbled 9 percent in November from October to a seasonally adjusted annual sales pace of 647,000, the Commerce Department reported on December 29. That was the worst sales pace since April 1995.

He also blamed part of the expected slow down to the “cost” of new climate change measures in the country, which Canada will have to undertake. In anticipation of the feared slowdown, the Harper government is also planning a “stand-pat” budget for stabilizing the effects of the expected economic slowdown.

Other factors, which support Prime Ministers predictions for the Canadian economic slowdown, are:

a) International Monetary Fund in its year-end review has downgraded its economic growth forecast for Canada by about 2.3 per cent than the originally predicted in October of 2007.

b) Economists at the Toronto Dominion Bank in Canada recently warned that Canadian economic growth will "slow materially" in the months ahead in the wake of United States, housing and sub prime credit crunch that have sparked fears of a full-blown recession.

c) Rising loonie (Canadian dollar) or its parity with the U.S. dollar has accelerated the loss of thousands of high-paying manufacturing jobs in Canada. Ontario's manufacturing sector has been particularly hard hit, with the loss of 44,000 jobs in the first nine months of this year. Ontario’s manufacturing labour union predicts that with the loss of one direct manufacturing job seven other jobs are affected.

d) A report released by the Statistics Canada point to sluggish labour productivity and a mixed performance in the manufacturing sector. Manufacturing output per hour of work declined, Statistics Canada said. Third-quarter productivity growth rate was the same as in the second quarter and down from 0.6% in the first quarter. And it was far behind the 1.6% third-quarter increase in U.S. productivity. Manufacturing productivity slumped 0.6% during the quarter as production fell 0.7%, hampered by the sharp appreciation of the Canadian dollar, while the number of factory hours worked declined 0.1%.

The fact is Canadian economy is almost  dependent upon exports to the U.S. Weakness in American real estate markets and a wide spread credit crunch in the U.S. is depressing consumer spending in the U.S., which in turn hampers the Canadian exports to the Canadian exports to the U.S.

A ray of hope for the Canadians is as economists predict the domestic side of the Canadian economy is likely to remain solid. Royal Leapage a leading Canadian Real Estate agency predicts Solid economic fundamentals should allow Canada's residential real estate market to chart its own course and maintain its buoyancy throughout 2008. Nationally, average house prices are forecast to rise by 3.5 per cent to $317,288 in 2008, while transactions are projected to fall slightly from this year's record high unit sales to 500,927 (-4.0 %) unit sales in 2008.

Some analysts predict the Canadian economy may spring back in the mid of 2008. However, that is a question which still remains to be answered and is largely again dependent upon its economy cousin, the U.S.

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Punjab Immigrants
Canadian visa chief’s comments under probe

Canadian immigration minister Ms. Diane Finley has ordered a probe into the alleged remarks made by the country’s visa chief in New Delhi questioning the recruitment of immigrants from Punjab, which has “high-crime, forgery and human-trafficking rates”.

Visa officer Brian Hudson allegedly made the remarks when British Columbia’s attorney-general Wally Oppal visited India recently. According to Oppal he was informed that Hudson told a delegation of university and college officials that he did not understand “why Canada was recruiting immigrants from Punjab, which has high-crime, forgery and human-trafficking rates”. Oppal, also British Columbia minister for multiculturalism, was in India at the time of the meeting, but was not present when the comments were made. He said that some had called the alleged comments racist though he had not used the word himself.

Former federal health minister and senior leader of the Liberals, Ujjal Dosanjh who is currently in India has urged the Canadian High Commissioner and other officials in Chandigarh to be more careful and also not routinely deny visas to Indians who either plan to visit for social meetings and for immigration. “We have received a number of complaints, many of these very genuine in this regard’, he told South Asia Post. He was apparently worried and disturbed over these alleged comments.

“We take all allegations of bias on the part of the department seriously. The minister has directed senior department officials to look into the comments made by a visa officer,” the minister’s communications director Mike Fraser said in a statement. These speak about the mindset.

The delegation of university and college officials was in New Delhi as part of its efforts to attract more Indian students and professionals to Canada. It had successful meeting in Chandigarh and Delhi. This remark naturally upset their plans. But those who know how immigration system works would readily believe in these comments.

According to Oppal,” Mr. Hudson had said he did not understand why the heck we were recruiting in the Punjab; the state of the Punjab has the highest crime and forgery rate anywhere; the highest human-trafficking statistics in the world, and that we should be recruiting in South India." he maintained, "The people in the room were apparently offended, so much so that they approached me and approached the Premier with respect to the statements that were made."

Hudson deferred comment to officials in Ottawa, saying he was "not going to jump into the political arena."

According Ms Finely, “ Canada accepts more immigrants from India than any other country but China, and 10,000 more last year than a decade ago - from 19,000 in 1997 to more than 30,000 last year."  She also noted that four out of five students from India applying to degree-granting universities and colleges in Canada are accepted. "Overall acceptance rates for student applications in the Chandigarh office have risen steadily from 14 per cent in 2004 to 20 per cent in 2006," the statement claimed.

He noted that Canada receives only 2,500 of about 100,000 students from India who annually study abroad. By comparison, he said 60,000 go to the United States and 30,000 to Australia. The combination of a booming economy, aging population and low birth rate in Canada are fuelling a need for qualified immigrants.

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