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What’s coming for Canada’s economy

This month, VERICO economist Michael Campbell gave us an overview into the current state of the Canadian economy and what you should be aware of. Below is an excerpt from Michael’s report.

After continually underestimating the impact of falling resource prices – especially oil, the Bank of Canada has come to realize that this is a major restructuring of the economy that it estimates can take up to 5 years and remove $50 billion a year out of the economy annually.

But please understand that the economic problems are focused in Alberta, Saskatchewan and Newfoundland – the economy outside resources is still moving along.

The big economic hope on the short term rests on a falling loonie that represents a de facto 40% plus pay cut for Canadians over the last 2 ½ years. Given that 75% of our exports go to the States, exporters will be thrilled with the lower dollar.

We’re also looking for a big year in tourism thanks to the low dollar. The drop in the loonie has already spurred a 21% increase in same day visit from the US in the first 10 months of 2015 while same day visits to the States by Canadians dropped 9.3%, which is good news for retail.

The big question for upper end real estate market in Vancouver and Toronto is – will foreign buying – mainly from China – slow down due to its recent financial problems?

Only a major debt implosion could derail the outflow from China, which in turn would put significant downward pressure on prices of upper end real estate as Chinese buyers retreat.

The lower end of the market is predominately influenced by immigration and interest rates as well as overall growth prospects and a strong job market for a specific jurisdiction.

On that score British Columbia leads the country with projected growth in 2016 of 3.7% compared to a contraction of 1.2% in Alberta.

In terms of immigration from other provinces, in the third quarter of 2015, BC posted its best performance in two decades as 6,300 came into the province. Obviously, increasing demand for housing.

To find out how your home value and mortgage will be affected by this changing economy, talk to me, Leslie McCann. I’m your mortgage expert and I can help you save more over the lifetime of your mortgage.