Canada Escapes Recession's Grip
Originally published on Sun December 11, 2011 6:58 am
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As Europe works to solve its financial problems, closer to home - and with a little less fanfare - America's biggest trading partner is thriving. Canada has built an impressive track record throughout the recession. It's got low unemployment, little government debt, and some of the healthiest economic growth in the industrialized world. Brian Mann traveled to Toronto for WBEZ's Chicago's Front and Center project, and has this story.
BRIAN MANN, BYLINE: It's early morning and Toronto's central business district is in high gear, with people crowding into street cars, heading to work.
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MANN: This city of 5 million people sits just a few hours' drive from America's Rust Belt - from Buffalo and Detroit. While those cities have shed population and are struggling to reinvent themselves, Toronto is on fire. Matthew Mendelsohn heads the Mowat Centre for Policy Innovation.
MATTHEW MENDELSOHN: Our financial sector, our financial institutions are the healthiest in the world. And so that creates enormous opportunities.
MANN: Canada has some of the strictest banking rules in the world. While hundreds of banks failed in the U.S. during the recession, this country hasn't seen a single major bank failure - not one. In fact, banks here are posting record profits. There's also no mortgage crisis in Canada. And while U.S. politicians feud over government spending, Mendelsohn says political parties on this side of the border have done the hard work of balancing budgets.
MENDELSOHN: The last decade has been one of Canada paying down debt, while it's been one of the United States ratcheting up debt. And so that creates much more flexibility for Canada to invest and make choices when a recession arises.
MANN: It's a huge turnabout for a country that in the 1990s, was an economic basket case. In those days, the Canadian dollar was so weak that it was known as the northern peso. Now, Canada's dollar trades on par with American greenbacks, and economic growth here is a third higher than in the U.S. Unemployment remained relatively low during the recession, and people who do lose their jobs in Canada can expect to be out of work for half as long, compared with jobless workers in the U.S. Economists credit Canada's prosperity to a wide range of factors, including the rapid expansion of the country's oil industry and a very different approach to immigration.
MARIO CALA: We've instituted a managed, point-based immigration system.
MANN: That's Mario Cala, head of a nonprofit that runs a network of immigrant welcome centers for the Canadian government. While the U.S. grants most of its green cards on the basis of family connections, Cala says Canada actively seeks out immigrants who can bring money, high-tech skills or new businesses to boost the economy.
CALA: Canadians understand that while these people that are coming from other countries may be very different from us, they're coming with great talents and skills.
MANN: As a consequence, Canadian cities have emerged rapidly as high-tech international hubs, with deep ties to China and India. Not everything here is perfect. Canada has seen government debt creep up during the recession, and there's a growing environmental debate here, and in the U.S., over the impacts of Canada's booming oil industry. But many economists in Canada say their biggest economic vulnerability long-term may be an over-reliance on the United States, which now buys more than 70 percent of Canadian exports. Matthew Mendelsohn, with the Mowat Centre, says Canada is racing to diversify.
MENDELSOHN: We are in the process of historical pivot. Our future can not only be tied to exports to the United States, it also has to be tied to the emergence of Asian economies.
MANN: That pivot will take decades and for now, Canadian exporters are watching nervously to see if the American economy, and American consumers, will continue to bounce back. For NPR News, I'm Brian Mann. Transcript provided by NPR, Copyright NPR.