Canada is in pretty good shape. Real growth in the first half of the year averaged slightly above 3.5% and the country’s net debt-GDP ratio of 30.1% in 2006 is the lowest of any member of the G8 group of industrialised countries. Its unemployment rate stood at a 33-year low of 6% as of September 2007.
The second half of the year looks as though it will be a little tougher. Weakened credit markets and the rocketing strength of the Canadian dollar – which has broken through parity with the US dollar for the first time in more than 30 years – are expected to put the brakes on the economy and to slow growth to 2.8% to the end of 2007, and maybe 2.5% next year. But continued favourable terms of trade should limit the damage – they have improved by 20% since 2002, driven by rising foreign demand and rising prices for Canadian energy exports.
