5 Mar 2015
Positive perspective for the Canadian economy in the longer term – Rabobank
FXStreet (Edinburgh) - Strategist Philip Marey at Rabobank looks beyond the current lower crude oil prices and sees a positive net outcome for the Canadian economy.
Key Quotes
“The plunge in oil prices in the second half of 2014 is expected to have a negative near-term impact on the Canadian economy. Lower oil prices reduce Canadian income and wealth, which could lead to a deterioration in the country’s public finances and a slowdown in consumer spending”.
“What’s more, they reduce the incentives to invest in oil and gas exploration, which could lead to a contraction in business investment in the energy sector”.
“In the longer term, the recent depreciation of the Canadian dollar should offer some relief to the economy: USD/CAD has risen from 1.06 in July 2014 to about 1.25 in February 2015”.
“Also, the net positive impact of cheaper energy on the world economy should improve the global outlook, which could benefit Canadian exports. Meanwhile, lower oil prices are providing a net boost to the US economy –Canada’s main trading partner–, which is less dependent on oil exports”.
“In particular, US consumers are spending less on gasoline, so they have more left to buy other items, including products imported from Canada. Stronger demand from the US should benefit Canadian exports and increase incentives for Canadian firms in the non-energy sector to invest. Over time, this should ignite a re-acceleration of the Canadian economy.”
Key Quotes
“The plunge in oil prices in the second half of 2014 is expected to have a negative near-term impact on the Canadian economy. Lower oil prices reduce Canadian income and wealth, which could lead to a deterioration in the country’s public finances and a slowdown in consumer spending”.
“What’s more, they reduce the incentives to invest in oil and gas exploration, which could lead to a contraction in business investment in the energy sector”.
“In the longer term, the recent depreciation of the Canadian dollar should offer some relief to the economy: USD/CAD has risen from 1.06 in July 2014 to about 1.25 in February 2015”.
“Also, the net positive impact of cheaper energy on the world economy should improve the global outlook, which could benefit Canadian exports. Meanwhile, lower oil prices are providing a net boost to the US economy –Canada’s main trading partner–, which is less dependent on oil exports”.
“In particular, US consumers are spending less on gasoline, so they have more left to buy other items, including products imported from Canada. Stronger demand from the US should benefit Canadian exports and increase incentives for Canadian firms in the non-energy sector to invest. Over time, this should ignite a re-acceleration of the Canadian economy.”