Our team was privileged to participate virtually in the Franklin Templeton’s 2021 Global Investment Outlook presentation on December 1st with keynote speaker, Stephen Poloz – special advisor to Osler, Hoskin & Harcourt LLP and former Governor of the Bank of Canada. This is part of the ongoing research we do for our client portfolios.
Mr. Poloz’s presentation was entitled the Tectonic forces acting on the Canadian Economy.
He highlighted five tectonic changes that we are seeing in Canada during the global Covid-19 pandemic.
Population Aging – slowing growth with the back half of the post-war baby boom and interest rates will likely stay low for a longer period of time and may not return to a normalized rate of 2%.
Growing Indebtedness – staggering amounts of government debt in Canada and worldwide. The central banks have pumped in lots of liquidity into the economies.
Technological Progress – similar to previous industrial revolutions in previous generations the digitization of the economy with AI (Artificial Intelligence) has progressed in leaps and bounds during the past eight months specifically – this will have long-term consequences to how we live and work daily. Advancements that were going to come in the next decade or so (good or bad) have been accelerated since March of 2020.
Rising Inequality – reality is that the growth is not equal; some companies and some individuals will succeed more so than others. There is an undercurrent of discontent in society currently.
Climate Change – managing carbon footprints will increase corporate costs, potential job losses as companies shift to more and more green options, and the opportunities they present.
Mr. Poloz discussed the large federal and provincial government’s deficit and inflationary pressures (perhaps deflation and stagflation). Mr. Poloz commented that “Canada is in a healthy situation – working our way through it as well or better than others.” Covid-19 has accelerated many of the above noted tectonic changes. Stay healthy and positive during these difficult times.
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-Deborah, Kelly, & Gary