The Conference Board of Canada has acquired a reputation as one of the nation’s foremost authorities on economic matters. The group’s dedication to evidence-based research and analysis meant it had quite the decision to make in finding a replacement for outgoing chief economist Glen Hodgson.
That search is now over, with Craig Alexander taking the prestigious post after first excelling as vice-president, Economic Analysis at the C.D. Howe Institute.
Speaking to Wealth Professional following his appointment this week, he outlines why the role appealed to him so much.
“The job has a number of different dimensions. One of the key parts is overseeing economic forecasts and that’s something that I’ve done for close to 20 years – projections for the global economy, the US economy, the Canadian economy and all the way down through the provinces to the metro level.”
Growth in the domestic economy, or lack thereof, has caused plenty of debate among economists in the past number of years. Most recently, a new study from Alexander’s former colleague at the C.D Howe Institute, Jeremy Konicki, suggested that the downturn of early 2015 may not have technically been a recession. Since that term figured so prominently in last year’s federal election, the report created quite a stir in investment and political circles.
An expert in such intricacies, The Conference Board of Canada’s new chief economist explains how a grey area can exist on these matters. “There has to be a long enough contraction to count as a recession and it has to be deep enough,” says Alexander. “Also there has be dispersion, which is different than a sector shock. On all three of those dimensions, duration, depth, dispersion – it’s really ambiguous if you would call that period a recession.”
Things haven’t really changed that much in 2016 with volatility in Canada’s economy remaining engrained. According to Alexander, the reasons for this go far beyond the borders of the Great White North. “The global economy is very fragile,” he says. “Economic growth has averaged about 3 per cent the last several years. The global economy growing at two per cent is typically considered a recession, so we have had very lacklustre growth.”
While acknowledging that international conditions remain unfavorable, Alexander explains that not all of Canada’s economic woes are the result of outside forces.
“Economists don’t have a good explanation as to why Canada does so poorly in productivity,” he says. “It’s like a good murder mystery – there are many suspects. Canadian businesses do not invest as much in machinery and equipment per worker as the US. Also, they are slower to adopt new technology and often want to see it tested in the US first.”
This investment deficit often comes down to a business culture that is hindering real growth in Alexander’s view.
“Research shows that Canadian business leaders are more risk averse than their international counterparts,” he says. “Some degree of risk aversion is desirable, we saw that with the boom and bust of the US housing market. But you do need to take intelligent risk when you are competing in a very competitive global market.”
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