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Canada`s economic recovery is likely to be far stronger than markets anticipate, a Bay Street economist forecast yesterday, indicating that a "burst" of 10% growth is possible in the coming quarters.
The prediction from Sheryl King, chief economist and strategist at Merrill Lynch Canada, comes amid fierce debate over what shape the recovery will take following the deepest recession since the Second World War.
"Markets think we are going to get this gradual rise in growth, and then everything is going to be fine," Ms. King said in an interview. "But business cycles never end like that. You usually get some pop in growth."
Those who argue that a strong rebound, rather than a slow, weak recovery, is in the offing were handed a key piece of evidence yesterday when major U. S. credit-card providers, led by American Express Co., reported defaults and delinquencies were less than expected in June. This may signal that U. S. consumers` credit positions -- up until now, the missing piece in the U. S. recovery puzzle -- are not deteriorating as rapidly as feared, despite rising unemployment and the continuing housing slump.
Ms. King`s bullish call, which would an indicate a V-shaped recovery is in the works, is based on surprisingly positive results from two Bank of Canada business surveys, released on Monday. They showed firms are the most optimistic about future sales in almost a decade, and obtaining new loans is becoming less difficult.
Since the release of those reports, the Canadian dollar has added nearly US4¢ to its value, closing yesterday at a one-month high of US89.74¢ for a one-day gain of nearly US2¢. Further, Canadian data on Tuesday suggested the market for existing-home sales has recovered in earnest with stunning month-over-month and year-over-year gains.
Read the full article here.
The prediction from Sheryl King, chief economist and strategist at Merrill Lynch Canada, comes amid fierce debate over what shape the recovery will take following the deepest recession since the Second World War.
"Markets think we are going to get this gradual rise in growth, and then everything is going to be fine," Ms. King said in an interview. "But business cycles never end like that. You usually get some pop in growth."
Those who argue that a strong rebound, rather than a slow, weak recovery, is in the offing were handed a key piece of evidence yesterday when major U. S. credit-card providers, led by American Express Co., reported defaults and delinquencies were less than expected in June. This may signal that U. S. consumers` credit positions -- up until now, the missing piece in the U. S. recovery puzzle -- are not deteriorating as rapidly as feared, despite rising unemployment and the continuing housing slump.
Ms. King`s bullish call, which would an indicate a V-shaped recovery is in the works, is based on surprisingly positive results from two Bank of Canada business surveys, released on Monday. They showed firms are the most optimistic about future sales in almost a decade, and obtaining new loans is becoming less difficult.
Since the release of those reports, the Canadian dollar has added nearly US4¢ to its value, closing yesterday at a one-month high of US89.74¢ for a one-day gain of nearly US2¢. Further, Canadian data on Tuesday suggested the market for existing-home sales has recovered in earnest with stunning month-over-month and year-over-year gains.
Read the full article here.