In his first public speech, new Bank of Canada governor Stephen Poloz didn’t provide many signals on interest rates, focusing instead on the importance of restoring confidence to Canadian business, particularly firms in the export sector.

Speaking to the Oakville Chamber of Commerce on Wednesday, Poloz stressed the need for a restoration of economic confidence, and he noted the lingering weakness in the export sector in particular. “This past downturn was different from previous recessions,” he said, resulting in many business bankruptcies, especially among small and exporting firms. “Many of those that survived dramatically reduced their operations, shuttering plants and dismantling equipment,” he added.

This, in turn, spelled lost jobs and lost output. “While both have recovered,” he said, “the structural damage caused by the crisis lingers. Indeed, our recovery has been primarily driven by higher household spending, while exports have lagged behind.”

However, that household spending was supported by strong growth in borrowing, which resulted in record-high debt-to-income levels that are ultimately unsustainable. “This growth model has been effective, but its limits are clear,” he said, adding that the Bank has reminding people that interest rates will rise at some point.

“We have urged homeowners and other borrowers to do the arithmetic to ensure that they will be able to manage their debts at more normal interest rates. I am confident that this is exactly what people are doing,” he said.

Now, he says, it’s seeing a “constructive evolution” of activity in the housing sector. “What needs to happen next is for export momentum to build and business investment to recover while the household sector settles into a more balanced and sustainable growth path,” he said.

“For all of this to happen will require the rebuilding of Canada’s economic potential. That is what makes this recovery cycle unique,” he noted, adding, “Rather than a recovery in the usual sense, this looks more like a postwar reconstruction.”

And, a self-sustaining recovery “has been delayed by numerous unusual risks, heightened uncertainty, and a lack of confidence,” he said.

Looking ahead, he said that the Bank expects growing momentum in foreign demand, especially in the U.S., to help bolster the confidence of exporters. “This is critical for Canadian firms to boost their investment to expand their productive capacity.The sequence we can anticipate is the following: foreign demand will build; our exports will strengthen further; confidence will improve; existing companies will expand; companies will invest to increase capacity; and new ones will be created,” he said. “This sequence may already be underway.”

While he didn’t explicitly address interest rates, apart from the Bank’s continued commitment to a 2% inflation target, he did hint that he won’t be changing anything immmediately in terms of its rate outlook, saying, “Right now, what we need most is stability and patience.”