Tuesday, June 16, 2009

"Canada has to triple or quadruple its attempt to deal with productivity," says economist Don Drummond. Trouble is, the recession has diverted us from this priority. (See the front page of yesterday's newspaper, where the Liberals are threatening to force an election becaue we don't pay people enough to not work).

If we don't invest in machinery and equipment, "what is tomorrow going to look like if we are not more productive than we are now?"

And now the questions begin.

"Where do you see the Canadian dollar stabilizing?"
Drummond says "stable" and "the dollar" shouldn't be used in the same sentence.

Based on economic strength, says Drummond, we don't warrant a dollar priced above 85 cents US.

But he sees the loonie rising to parity with the US$ later this year, and then falling back down to 90 cents (because our competitive position erodes at parity).

"Where do you see inflation in the coming year?"
"There is no technical reason inflation should be a problem," says Drummond. Except for the US government inflating its deficit.

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