The Indo-Canada Chamber of Commerce (ICCC) in collaboration with the CIBC organised its annual state of the economy talk at the Mississauga Convention Centre last week. Royce Mendes, Senior Economist, CIBC Capital Markets delivered a presentation on the economies and a forecast for the future trends.

Arun Srivastava, President of ICCC, welcomed the guests and informed them of the upcoming Canada-India Business Symposium that the Chamber is organising in association with the Canadian and Indian governments’ diplomatic corps. Venki Raman of the CIBC spoke briefly about the long established relationship between CIBC and the ICCC, and said it is a relationship that has helped both the entities grow.

In his brief but pointed presentation, Mendes began by analysing the impact of the Trump administration’s policies on the US economy. He said the US market is not rising and investors seem to have lost faith in the Trump administration’s ability to be a catalyst of change. The talk of 3 to 4 % growth in the US economy is nothing but fake news. The reason for this is that capital is not going to become expensive. The interest rates are going to continue to be low; also the nature of growth is that there is less capital needed and less investment because the US economy is moving away from manufacturing and it will become near impossible for the Trump administration to revive manufacturing in the US.

Raman, Mendes, Srivastava and Shankar	Srivastava with CIBC officials

Mendes said global outlook continues to be optimistic especially with India continuing to rise exponentially. Since 2013, the Indian economy has continued to maintain its growth rate and at 7.5% annual growth rate it has created an enviable pace unmatched globally. India will continue to bring labour into urban area.

Speaking about the Eurozone, Mendes said the Eurozone economies have shown resilience and potential to bounce back which needs to be acknowledged. The growing populism that is sweeping the economies in the Eurozone is because unemployment in the young demographic of 18-26 is endemic and unlikely to change dramatically.

He added that the economic recovery in the developed world has taken nearly a decade, but the recovery is all set to stay for a considerable time, resulting in the Eurozone stock value rising and the value of the Euro also rising. On the other hand, post-Brexit, the British pound has gone down and the disengagement will adversely affect the economy. However, the measure is irreversible.

Canada’s economy suffered from the oil shock and the measures undertaken to revive the growth rate haven’t quite worked. The primary reason for the failure of the revival plans has been the approach which is based on a two-economy model, when in reality the model should have been adaptable to multiple economies.

The growth continues to be fuelled by consumer spending and the housing markets, both of which the economic establishment have tried to rein in. We will experience a 4% growth in the first quarter and get back to near full employment by the end of 2017. Some challenges are likely to be encountered and these include changes in NAFTA, the border tax imposed by the US, changes in environment policies in the US and the changes in the personal income tax in the US.

Srivastava giving welcome remarks	Raman setting the pace

In the near term, it is unlikely that the Canadian dollar will appreciate to any great degree. The housing market will continue to grow steadily, and the trend in this sector is the growth of the condo housing, a trend that mirrors similar developmental stage in the sector in other cities such as New York and Berlin. The provincial government’s approach to control the galloping housing market by introducing new regulations in the sector as well the changes in the rental control act have largely yielded the desired results. But there is a real shortage of housing in Toronto, so the prices will continue to rise.