Economics 12 Chapter Six

Canada's GDP continues to slide, worst since 2003

Link: http://www.cbc.ca/money/story/2009/01/30/canada-gdp-december.html

Summary

This article talks about how Canada's economy continued its slide in November as the country's economic output shrank by 0.7%. It also mentioned how in August, the Canadian economy slipped 0.5%, this is an indication that a financial slowdown had already hit Canada prior to the credit meltdown that really began in mid September. Due to this, the country's goods producers were particularly hard hit in the past few months. Employment among these industries had already fallen more than 32,000,compared December 2008. Moreover, building trades were down 1.2% in November, it was an acceleration in the sector's downward slide as construction activity had decreased by 0.3% already in the previous months. Economists were already geared up for a contraction in the country's up coming quarters, estimating GDP will continue to drop. Analysts said that November's decline was one of the worst in the decade. For the year, Canada's GDP is expected to have barely moved the growth meter, increasing by 0.6%. By comparison, growth was 2.7% in 2007, a period when Canada was already entering into an economic slowdown.

Connections

Chapter 6 talks about GDP and aggregate demand, such as disposable income, government spending, investment, exports, imports and other factors that affects the economy. The article mentioned that Canada's GDP is continuing to drop, how we're entering a recession and many industries are affected due to employments, people spendings and etc. Without consumers spending, many business and industires are cutting back on productions or laying off employees to maintain their profit. Moreover, as of right now, unemployment is consider a major concerns for many Canadians, and due to this citizen's disposable income is decreasing. Which means many people are saving instead of spending. This will affect the GDP to drop even more and the economy could sink into a deeper recession stage.

Reflection

This was no surprise to me that people are saving instead of spending. I believe it is because many people are losing their jobs and they feel insecure about spending. If business stop laying off so many people or if banks starts lowering interest rates, it will motivate people to spend more and invest again into real esates and other goods and services. This would be an ideal way to get out of the recession/ crisis. However, this wouldn’t be something that can change overnight, it needs people to work to together and go throught this togehter.