The Canadian economy is doing well, despite the war in Ukraine

In an interview on the show Behind the scenes of power, he argues that Canada benefits from its position as an energy producer and exporter. For this reason, its growth should reach 3.9%. For 2022, we have a growth revision for Canada which is very modest, around 0.2 percentage points. In comparison, the IMF reduced the growth prospects of the European Union economy by 1.1%.

Nevertheless, Canadian consumers and particularly those with low incomes are affected by the conflict, which has accentuated the increase in the price of gasoline and foodstuffs.

The federal government must now juggle with a new reality, notes the representative of the IMF.

We have to manage to navigate this kind of tension between, on the one hand, withdrawing the very generous and very broad support measures that had been put in place [pendant la pandémie] and, on the other hand, put in place support measures targeted at food products and the price of energy to protect the most vulnerable households. »

A quote from Pierre-Olivier Gourinchas, Chief Economist of the International Monetary Fund, on the new reality of inflation

The global economy has generally rebounded well from the shock caused by the spread of COVID-19. In January, the IMF expected 4.4% growth in 2022-23, but lowered its forecast by 0.8% to 3.6% because of the war.

However, several clouds could darken this prognosis. An escalation of the conflict in Ukraine with an increase in sanctions against Russia is one of them. A deadlier variant of COVID-19 could also harm the global economy. And there is the ravaging inflation that central banks seek to control.

Portrait of Mr. Gourinchas.

Pierre-Olivier Gourinchas is the new chief economist of the International Monetary Fund.


Pierre-Olivier Gourinchas does not expect inflation to return to an annual rate of 2% in 2022. It could approach it in 2023, without crossing the threshold. Nevertheless, it may no longer be at 8, 9 or even 10% as we are likely to see in the months to come.

In Canada, the inflation rate reached 6.7% in March, the highest level in more than three decades. In the euro zone, the rise in prices crossed the 7.5% mark, while it rose to 8.5% in the United States. Monetary tightening by central banks raises fears of a recession in some countries.

The chief economist of IMF believes the risk exists, but notes that the economic recovery in advanced countries, including Canada, has been strong and the labor market strong with relatively low unemployment rates. There is nevertheless a margin before the tightening of monetary policies leads us into a situation of recessionhe believes.

Geopolitical concerns

In the longer term, Gourinchas worries about the fragmentation of the global economy into geopolitical blocs. The threat appeared following the war in Ukraine with its myriad of sanctions. The risk is not immediate, but it could have serious consequences and compromise the fight against climate change or another pandemic, for example. “The world would become smaller. The world would no longer be able to cope with the issues, ideals and challenges it faces. »

And for an organization that relies on multilateralism, such a scenario would go against the principles of mutual assistance, exchanges and partnership for which the IMF was created at the end of the Second World War.

Leave a Comment