Hvernig Kanada keyrði sig út úr kreppunni

Kanada hefur verið meira í sviðsljósinu efnahagslega undanfarið en yfirleitt áður.  Staðan hér er nokkuð góð, þó vissulega sé margt sem betur megi fara og mörg hættumerki á lofti. 

Umræða um Kanadískan efnahag hefur á Íslandi ekki hvað síst tengst hugmyndum um að hagstætt væri fyrir Íslendinga að taka upp Kanadadollar sem mynt.  Ég bloggaði örlítið um það fyrir nokkrum vikum.

Þá talaði ég um að ríki og gjaldmiðlar færu upp og niður og það væri ekki langt síðan að talað hefði verið um hættu á því að Kanada færi á höfuðið.  Kanadadollarinn hefði ekki þótt merkileg mynt (hann var stundum kallaður The Northern Peso) og ekki verið nema u.þ.b. 60 til 65% af því virði sem hann hefur gegn Bandaríkjadollar í dag.

En Kanada tók sér tak og vann sig út úr kreppunni.  Mest megnis með niðurskurði, en skattahækkanir urðu einnig töluverðar.  En nú birtist nýverið ljómandi góð grein á vef Scotiabank, sem ber einmitt saman hvernig ástandið var í Kanada og hvernig það er á Eurosvæðinu í dag.  Greinarhöfundur telur að í raun hafi Kanada farið í gegnum mun dýpri skafl en flest ríkin á Eurosvæðinu þurfi að horfast í augu við í dag.

Hér hafi ríkt pólítísk upplausn, hætta hafi verið á að ríkja og myntbandalag brotnaði í sundur og efnahagurinn hafi verið bágur.  Greinina í heild má finna hér (PDF), en ég birti nokkur dæmi hér að neðan.

The night of the Quebec referendum on October 30th, 1995 portrayed Canada at its worst. The palpable fear in the markets was keyed off deep intertwined concerns about the country's fiscal, economic and political circumstances. Recall this was a period when a respected US financial daily slammed Canada as a ‘banana republic’, yet curiously such references to its home country are absent today. I’m paraphrasing from memory, but it was also a period when the nation’s political leaders dismissed capital markets critics as “armchair observers who wouldn’t know how to run a country.” Such a market-unfriendly back drop understandably drew the ire of rating agencies through multiple downgrades, as well as bond markets as the country faced the threat of break up and dissolution of monetary union. Simply put, Canada then was Europe today.

It must also be noted that Canada achieved virtuous fiscal rectitude within the context of a crushing interest expense burden that neither the US nor most of Europe presently face. In the 1990s, total federal public debt charges as a share of GDP soared to about 6.6% by 1990-91 and remained over 5% until the 1997-98 fiscal year in stark contrast to how low interest rates are keeping the US interest expense burden at rock bottom levels today (chart 3). In order to achieve fiscal balance, Canada had to pursue the draconian cuts to program spending noted above as a high interest burden made achieving fiscal balance vastly more difficult. That day may come for the US and core Europe, but current bond markets afford enormous flexibility to global governmentsoutside of peripheral European states which is not being adequately capitalized upon particularly in the United States.

As a consequence to its earlier sacrifices, Canada is today part of a dying breed of AAA rated markets. Its status as the 8th largest global bond market at face value somewhat hides the additional fact that fewer yet are AAA rated among the world’s deepest bond markets. Against the myth that this was easier for Canada to achieve during different times, what’s amazing about the Canadian experience is that it was achieved during at least as trying if not more troublesome times after taking account of the full global and domestic picture at the time. The country therefore offers an important lesson to nations like the United States and large parts of Europe that are delaying fiscal repair, and punting the problem down the road toward a more ruinous crisis later. All that said, our message is not one of arrogant neglect toward the present Canadian situation. The country has done well through the crisis, but resting on its laurels and pointing to past painful achievements is no way of ensuring that the country retains its advantages. Today’s large Canadian trade deficits, still sizeable fiscal deficits at Federal and some provincial governments, the increase in the general government debt to gdp ratio from a trough of 66.5% in 2007 to about 84% today following pre-crisis accelerated spending and the crisis stimulus response, high refinancing amounts on short-dated debt at combined levels of government, record high house prices by any measure, and record high household leverage are sources of concern. They are, however, mitigated by a strong financial system, little external debt relative to GDP in contrast to Europe,excellent corporate balance sheets, resource riches, and a strong government financial asset position that translates into a net debt to gdp ratio of just over one-third. This mixed assessment of the nation’s finances for a trade-reliant country that is a price taker across most industries makes it prudent to continue to pursue measures that extend its relative success.