Canada has work to do, but it is stronger than when he took over as head of the Bank of Canada five years ago, outgoing governor Mark Carney said Tuesday.
“We’re in a stronger relative position compared to other advanced economies today than we were in 2008 but we’re in a tougher world,” he said after making his final speech as governor before departing for the Bank of England next month.
Rejecting suggestions of being a “rock star central banker,” Carney credited a team of people that made crucial decisions.
“I really don’t think you should judge your own legacy,” he said, adding it will take time for a full evaluation to emerge.
Carney described his tenure during the financial crisis as being “very intense for a very long period of time.”
“I think by and large the right decisions were made.”
The central banker said Canada can seize opportunities to build a better future more than other countries because it doesn’t have to repair the economy or worry about getting out of trouble.
But, he said, Canada is less well-oriented to the sources of global growth than it has been in the past.
It must focus more carefully on exports and business investment, Carney said.
He calculated that exports are currently $130 billion less than would have been the case in a typical postwar recession. That represents about eight per cent of gross domestic product.
Carney said the Canadian government is correct in seeking out new trade deals, particularly in emerging economies, because they represent one half of the world’s imports growth and also are essential to securing a position in global supply chains.
“To find and compete in new markets will require a concerted, multi-year effort by workers, firms and governments.”
Carney has long stressed the need to transition Canada’s exports-based industries from reliance on slow-growing economies like the U.S. and Europe to fast-growing markets in China and Asia in general.
But the advice took on added currency as it was likely the last time he will pronounce generally on the Canadian economy for at least the next five years, the term of his posting in London.
Canada coped relatively well to the financial crisis, he said, noting that by the start of 2011 the country had recovered to the GDP level it held prior to the recession and that as of now, there are 480,000 more Canadians working than in the fall of 2008, when the slump began.
It has been able to make the adjustments because fundamentally the Canadian system works, Carney said.
Despite criticism, Canada’s labour market is relatively flexible, with labour mobility similar to that in the United States and about four times as flexible as in Europe.
“Canadians are going where the jobs are,” he said. “Last year, there was a net inflow of more than 40,000 people into Alberta from the rest of Canada, a level of mobility that approaches its previous peak.”
Carney said Canada also has a functioning monetary union despite the lament about provincial trade barriers and the two-speed economy caused by high commodity prices.
He also praised what he calls “fiscal federalism,” the often maligned system of wealth transfers from have to have-not regions. Rather than a weakness, the system helps stabilize localized “asymmetric shocks” and share the risks, he said.
Lastly, the central banker said Canada has been well-served by a sound and regulated banking sector, as well as low government debt that allowed policy-makers room to borrow on global markets to stimulate the economy.
Carney said Canada cannot rest on its laurels, however.
“In a rapidly shifting world, only sustained education, ingenuity and investment can maintain competitiveness,” he said. “This means we must continuously invest in our workforce. With technology and trade transforming the workplace, the need to improve skills across the spectrum of work has never been greater.”
With files from Julian Beltrame in Ottawa