Effective Foreign Stimulus in Canada

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By Elli Davis, January 31, 2010

Canada as the second best by Jim Kuhn

Canada ended up as the second best in gaining economic profit from foreign stimulus, a new research made by the Bank of Canada claims. Only the European Union scored better. The huge stimulus packages of other world economies apparently pushed our economy forward much more than the $62-billion domestic stimulus.

Thanks to domestic stimulus, the level of Canada’s GDP increased by 0.7% in fourth quarter of 2009 in comparison with the same period a year before. Not bad, but if we take foreign stimulus into account, the GDP growth almost triples, as it is at the level of 2.05%.

The report says that the fact that Canada is a relatively small open economy “sharply curtails the effectiveness of the domestic stimulus.” That is not great; it would be much better if the domestic stimulus was more efficient. But the report should not make the leaders believe domestic stimulus is not important. Of course it is. What would we do without it?