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The savings to canadian, american and world and have all the opportunities this year to beat the record of the longest period of uninterrupted growth in modern history.
In spite of the evocation of more frequent risk of recession, the economic growth is expected to continue into 2019, and even after, think of economists. But at a pace slower and slower. And on condition that everyone be very careful.
The stock markets have been severely shaken this week after learning of bad news on the impact of the war of the us tariff on chinese economy and, by extension, on the sales of american giants technology like Apple. This new roller coaster ride was a result of a year-end 2018 to be particularly difficult on this side, so that the trade wars triggered by Donald Trump seemed set to continue, as central banks continued raising their interest rates, as signs of an economic slowdown appear a bit everywhere in the world and that more and more voices evoke the risks of a recession.
Yet, the economies of canadian, american and world and have all the opportunities this year to beat the record of the longest period of uninterrupted growth in modern history, said last month the chief economist of the TD Bank, Beata Caranci, in an analysis. Although the history of capitalism has taught us that periods of economic expansion are not eternal, that a large number of countries do provide signs of an economic slowdown and that, increasingly nervous, the markets have experienced their worst year since the financial crisis, ten years ago, the time of the next recession does not yet appear to have happened.
Ce text is part of our “Outlook” section.
It is true that we talked a lot about the threat of recession in the financial markets and the media, in particular because of the extreme volatility in the stock markets throughout the year, but this is far from being a predictor infallible, she argued. The famous american economist Paul Samuelson did he not say that this volatility had predicted nine of the last five recessions ? The examination of other financial indicators are often cited, such as the famous curve of bond yields to short term and long term, is hardly more conclusive, believed Beata Caranci before returning his readers to the consideration of the real economy.
On this side, we should not be too much fear of a recession this year, nor next year, said last month the economists at Desjardins group at the conclusion of the latest update to their economic forecasts. Struggling with a decline in the expenditure of households and energy sector in difficulty, but can expect a rebound in exports through the conclusion of his arduous trade negotiations with the United States, Canada should continue to see its economy slow down gradually to a growth rate of 2.1% in 2018 to 1.8 % this year and 1.7 % the year after. Still excited by the tax cuts and increased spending of Donald Trump, the u.s. economy is expected to maintain a pace of 2.7% in 2019, after having recorded a rate of 2.9 % in the last year before decreasing to 2 % in 2020. No, if there is a slowdown, it will come the year after that, believe the economists at Desjardins group, in 2021, where the average growth could be as low as 0.6 % in the United States and 0.5 % in Canada, before coming back thanks to the action of the central banks.
“The signs of the end of the cycle are more and more numerous “, was the chief economist of the Mouvement Desjardins, François Dupuis, at the end of the month of November, during a conference on the subject organized by the Conseil des relations internationales de Montréal (CORIM). “But we can hope for a soft landing if the trade conflicts, in particular between the United States and China, do not turn even more evil. “
Many observers fear that the central banks and their interest rate increases that eventually break the growth of more and more fragile, which would not be the first time. The approach is more circumspect of the u.s. federal Reserve as the Bank of Canada shows that they are aware of the risk.
“The period of growth is not on the eve of turning into a recession, it arrived at its mature phase “, explained the chief economist and strategist of National Bank, Stéfane Marion, to the conference of the MCFR. “History has shown us that it could take anywhere from 22 to 72 months. This kind of phase is always more heated. The boat creaks, but it continues to move forward. “The duration of exceptionally long the current period of expansion does not help to calm the minds in the finance sector. “Because of our high rate of turnover, most people have never experienced such a phase. As for the banks, this is exceptionally long as they have not had to tighten their monetary policy. They are corroded. “
Being afraid of fear
When one enjoys such a long period of uninterrupted economic growth and interest rates so low, it is expected that certain assets are overvalued and that some actors are over-indebted, ” remarked François Dupuis. A slowdown in economic growth and an increase in the cost of money is likely, in this context, placing some in an awkward situation.
Unlike the last financial crisis, which is part of household debt and the real estate bubble burst, it is in fact more today with the indebtedness of the companies, particularly in developing countries, explained the chief economist of the National Bank Matthieu Arseneau at a conference organized by the Association des économistes québécois. “It is important to remember, is that these developing countries now rely more than 60 % of the global economy. “
Between the risks of escalation of the tension of trade between the United States and China, and the difficult negotiations of the Brexit, through the evolution of technology, the geopolitical situation and all flaws in the economy that do may still not be detected, nobody can say with certainty that things will not turn evil this year in a world economy that is increasingly complex and interconnected, concluded last month Beata Caranci. But what we do know is that the confidence of consumers and businesses is a key factor to growth, and that, to use another way as the famous statement by president Franklin Roosevelt during the Great Depression of the 1930’s, the only thing we should fear today is the fear of a recession.