What You Need to Know about the Canadian Economy

Every country always needs to consider the stability of their economy. While the United States is known to be largely in debt and struggles for a positive outlook, there are other countries that either find themselves in similar situations or on top of their game.

In recent years, Canada, which was once one of the most stable economic countries—number 12 in the world—has faced some debilitating events that has caused it to shift from growing to falling. To completely understand exactly what’s happening, the following are a few things you need to know about the Canadian economy.

Oil prices keep falling.

Canada has some vast oil reserves, and their economy depends on this. The country is known to export their oil to other countries when in need, and they can make a decent profit on it. However, in the past year, oil prices have fallen to nearly record lows, and Canada is starting to feel the heat of this deflate. Now, when exporting oil, the profit they make is much less than it was years ago, and this has negatively impacted the overall economy. To counteract this, Canada’s central bank lowered the interest rate in 2014, but it didn’t necessarily help.

Canadian currency is weak.

Throughout most of the recent past, the Canadian dollar has held close to the US dollar in terms of value, and this has allowed the economy to thrive. However, in 2015, Canada’s dollar plummeted to a 12-year low against the US dollar, and experts are unsure how or when it may balance itself out. Many have suggested changing interest rates or finding other solutions, but as of now, the plummet is putting many in fear of the stability of their economy.

Justin Trudeau makes poor decisions.

Justin Trudeau knows that the economy is weak, but he’s not making smart financial decisions. He wants to spend $60 billion on infrastructure as well as spend money on climate change and other non-revenue-generating projects. If he continues to make these types of decision, the country’s debt can spiral out of control.

The interest rate is staying as is.

With low oil prices and a weak Canadian dollar, many experts expected Canada’s central bank to raise its interest rates in hopes of reversing the shaky economy. However, the central bank doesn’t seem to worry about it. Instead, they announced that they are going to keep the interest rate unchanged at 0.5%. This rate was lowered last year to counteract the effect of falling oil prices, and experts believe that if they cut it again, it will cause the currency to devalue even more. Instead, the hope is that keeping the interest rate as is will eventually balance everything out.

For Canadian residents, there’s not much that can be done to fix the situation. For those in fear of losing everything, find ways to save money for a rainy day. Find Canada online deals instead of paying full price, consider how you save money, and just use your best judgment. In the end, hopefully everything will balance itself out and Canada will find itself back near the top of the world’s most stable economies.