Entering text into the input field will update the search result below

Bank of Canada - Broad Based Recovery.

Dec. 12, 2009 7:42 PM ET
Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

This is the financial system review from the Bank of Canada, December 2009. The macro-financial environment.
http://www.bankofcanada.ca/en/fsr/2009/fsr_1209.pdf
An excerpt:

"The prospects for global economic growth have been revised upwards. While the recovery has been led primarily by Asian economies, recent indicators suggest that a broader-based recovery is in place, supported by considerable fiscal and monetary stimulus across the G-20 economies. Overall, the risk of a renewed downturn in global economic growth has receded since June, and the adverse feedback loop between the real economy and the financial sector has reversed.

The Bank projects a more subdued global recovery than in previous cycles, with stimulus from fiscal and monetary policies tempered by the effects of the important structural changes that are under way. These adjustments include a significant rebalancing of spending and saving patterns across major trading partners, including the United States and China. This rebalancing will set the stage for more broadly based, sustainable medium term growth. The transition is expected to involve some material fluctuations in exchange rates over the medium term. There is a risk that this adjustment could be disorderly.

The U.S. current account deficit has narrowed from its peak. This is the result of lower U.S. demand for imports and lower oil prices, and it was also facilitated by the orderly depreciation of the U.S. dollar on a trade-weighted basis.

In addition, the financial crises has increased fiscal deficits that were already rising in response to demographic pressures. The IMF projects that gross public debt in advanced countries will reach over 120 percent of GDP by 2014. This is predicated on deteriorating fiscal deficits resulting from support to the financial system, discretionary stimulus measures, and long-lasting reductions in certain tax revenues. The stabilization of public debt levels will require large and sustained improvements in primary fiscal balances. (The primary fiscal balance of a country is the difference between government revenues and non-interest expenditures).

However, the G-20 countries are focused on the sustainability of the recovery and have yet to produce comprehensive medium term, fiscal plans. Given the potential for disruptions in credit markets and for higher risk premiums, large fiscal deficits pose a risk to financial stability."

Disclosure: No Position.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You