2011 Facts
1. Canada grew faster than Emerging Market darling Brazil. Despite challenges in Canada and the global economy, Canada grew by 2.3% not far off expectations and near its long-run average. Brazil grew 2.1% over the same time period while the U.S. grew 1.5% and the Eurozone 1.4%.
2. The Canadian Dollar was the weakest amongst G10 currencies. Global investors were not impressed with our Canadian dollar in 2011, driving the currency down more than 2% on the year. Surprisingly the loonie was not only weaker than the U.S. dollar and the Japanese yet (the strongest currency this year) but the Euro as well.
3. The U.S. government has lowest interest rates since 1950s. Combining the credit rating downgrade of U.S. government debt, the intense focus on deficits and debt, and a 3%-plus inflation rate, the ten year interest rate on government debt ended the year close to all-time lows around 2%.
4. Gold was the top-performing commodity of 2011. Despite record gold, silver and copper prices in 2011; commodity prices sagged over all this year with the index falling more than 8%.
5. Canadian inflation rose at its fastest pace in 20 years. Even with our soggy economy the inflation rate (cost of goods) rose by 3% this year. This is the fastest annual increase since 1991, the year GST was introduced.
2012 Predictions
6. North American economies will detach themselves from the European recession. The most encouraging development in recent months is the ability of the U.S. economy to grow modestly in the face of Europe’s deepening woes. Canada and the U.S. economies are expected to grow at a 2% rate next year. For the first time in seven years the U.S. should grow faster than Canada.
7. U.S. Housing will finally start to grow again in 2012. After declining relentlessly for six consecutive years, and hitting a record low, residential construction is finally showing signs of growth, albeit slightly for the U.S. next year.
8. The Bank of Canada will have its longest period of inactivity since the 1950s. The Bank of Canada was the only bank in the G10 that did not cut interest rates in 2011. Even though there is talk of a cut in 2012, if they stand aside and do nothing; that would hold rates for 28 months, the longest stretch of stable Canadian interest rates since the 1950s.
9. China’s economy will slow down. With the global economy sagging and the Yuan appreciating 5% combined with weaker European demand, China’s economy should slow moderately. China has been the engine that has kept global economies going over the last few years, but policy makers must slow it down before it over heats.
10. Calgary and Edmonton will be the two hottest real estate markets. Vancouver has outpaced all Canadian cities since 2010 with price increases of up to 16%, that won’t be repeated this year. There are already signs of sales dipping and prices coming down. Toronto has been the hottest major market in recent months, and looks to be at the risk of overheating. Calgary and Edmonton have enjoyed stable prices in recent years and with Alberta recording the strongest employment growth in Canada in 2011, look to these two cities to be the hottest housing market in 2012.
Wishing you and yours All the Best in 2012,
Happy New Year!
Tracey
Original article by staff at advisor.ca
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