Global Corporate Xpansion

is supported by the fact that mortgage rates and interest rates are low in Canada at the moment.

This strong recovery should last until the middle of 2010. We will see the pace of economic activity weaken from there into 2011 as the fiscal stimulus that was put forward is reigned in in 2011 because now the federal government and most provinces are facing considerable deficits, and need to look do this before things get out of hand.

GCX: Share the highlights of the report that was put together by the Conference Board of Canada to discuss the federal government’s budget, which was released earlier this year.

Bernard: Right now the infrastructure program is in place. On the other hand, business investment was hurt severely by the recession. Profits and cash flows were down. So we think it will take another six months before the business sector is able to pick up. Consumer demand in the United States is still quite low and since 70 percent to 75 percent of Canada’s exports go to the United States, it will take a while longer for the private sector to rebound and invest again.

That is why the fiscal plan was put in place, temporarily, until the economy picks up. It will be pulled back and so will the government’s spending on goods and services.

GCX: In regard to this recovery, economists in America say this recovery is unlike anything experienced with previous recovery periods — that this is a whole new game. What might be different in Canada this time around? What can businesses expect?

Bernard: It is different in the states than in Canada. In the states, the consumer supports the economy a lot, and before the recession there was a lot of spending and credit. And the housing market was starting to weaken.

It wasn’t the same in Canada. There wasn’t a housing bubble and consumers did not overspend. We are not going to see the same situation in terms of how consumers react in the states versus Canada. In fact, consumers are still very active in Canada. They did hold back on spending in 2009 but it wasn’t a decline like it was in the United States.

Typically coming out of a recession we see strong economic growth. But this is not the case. The recovery will probably be spread over two years to three years before we get back to a more normal level of activity.

GCX: Let’s talk about the Prairie Provinces of Canada, Manitoba and Saskatchewan, and how each province’s economy is faring.

Bernard: Manitoba suffered from the global recession due to the fact that the province does export a lot of its products to the United States. The manufacturing sector’s decline led to a small decline in the real GDP in 2009. It did not suffer as much as other western provinces, and was the least affected by the global recession.