Thursday, August 13, 2009

Canada to move to 5th place in economic performance in 2010: Conference Board

By Krystle Chow, Ottawa Business Journal Staff

Canada's keeping its "B" grade on international economic performance this year and the next, but it's also expected to climb in the rankings, although it's partly because other countries have been harder-hit, according to the Conference Board of Canada.

The Conference Board's "How Canada Performs" forecast for 2010 said the country is expected in 2010 to move to fifth place out of the 17 countries ranked, just missing an "A" grade and jumping six spots from 2008.

Six "C" grades among the eight measures pulled down Canada's ranking in the last Conference Board report, although the country had scored highly on inflation and gross domestic product growth.

However, in 2010 Canada is expected to improve its relative ranking on GDP growth, unemployment, job growth, and both inward- and outward-flowing foreign direct investment performance, due mostly to the country's resilience in the face of harsh economic troubles worldwide.

"Canada is expected to weather the global recession better than most of its peers, which is a credit to its stable financial sector and a relatively healthier economic position upon entering the downturn," said Glen Hodgson, the board's chief economist and senior vice-president, in a statement. Still, he warned: "But achieving a higher rank because other countries are falling farther is not the basis for sustainable prosperity. Some of Canada's fundamentals, such as labour productivity, remain weaker than those of the global leaders."

The United Kingdom is expected to see one of the most severe drops in overall economic performance between 2008 and 2010, as the financial crisis has hurt the U.K. credit markets and housing prices, leading to weaker consumer spending and business investment, the report said.

However, the top and bottom rankings won't change, with Norway staying put as the strongest performer due in part to its large petroleum industry, while Ireland will continue to rank last.

The Emerald Isle fell from first to 17th place in 2008 amid a 2.7-per-cent contraction in economic output and a drastic deterioration in its domestic property market and construction sector. As well, its per-capita income, which was the third-highest in 2008, is forecasted to fall to 7th in 2010.