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(March 30, 2007) Two separate reports released Friday point toward an increase in economic growth over the year and into 2008.

RBC’s latest economic forecast predicts that Canada’s economy will grow by 2.5–3 per cent over that period.

RBC says that while growth slowed for much of 2006, the economy regained momentum by year end, helped by gains in manufacturing, trade and retail spending during the month of December.

“Canada’s economy softened in the latter half of 2006, with the trade sector as the main culprit, but solid growth is expected to return in 2007,” said Craig Wright, vice-president and chief economist, RBC. “The tight labour market, rising incomes and high levels of liquidity in investment portfolios will continue to support consumer spending and offset ongoing adjustments in trade and inventories.”

This stronger performance will help the dollar rise to around the 87 cents US mark, RBC says, adding that energy prices should also remain high, offsetting any other weakness the Canadian economy may experience over the period.

“With a strong global outlook and energy prices remaining high, demand for Canadian exports is likely to pick up, while the pace of import demand slows alongside the modestly weaker Canadian dollar,” Wright said.

“Overall, the drag from the trade sector is expected to trim only a tenth of a percentage point from 2007 real GDP, a marked improvement from the one and a half to two percentage point impact of the previous two years.”

Provincially, RBC expects Newfoundland and Labrador to lead the pack at 4% annual growth. Alberta follows at 3.6%, but this growth rate is expected to slow in 2008 to 3.2%. Alberta is followed closely by B.C. at 3.4%, and Ontario is expected to revitalize its economy, going from the bottom of the table at 2% this year to 3.1% by next. Quebec is expected to lag behind a bit at 2.1% growth, while the rest of the provinces will hover around the national average.

It’s not only bank economists that are optimistic about the economy. TNS Canadian Facts has released a Canadian consumer confidence poll that suggests that Canadians’ economic expectations are on the rise.

TNS’s Present Situation Index, which captures evaluations of the overall state of the economy and the employment situation, now stands at 115.5, a rise of five points from February. Fifty-six per cent think the economy is very or fairly good, and 49% think there are many or very many jobs available.

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CSA proposes new reporting requirements for CEOs, CFOs

(March 30, 2007) The Canadian Securities Administrators announced Friday that it is seeking comments on revised National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings and its related companion policy and forms. These proposed revisions would set out certification requirements for all reporting issuers, aside from investment funds, the CSA said.

Under the proposal, the CSA said that the CEO and CFO of an issuer would be required to certify in the management’s discussion and analysis that they have evaluated the effectiveness of their internal control over financial reporting and disclosed their conclusions, including information about identified deficiencies.

“Following extensive consultation and careful consideration of the debate about internal control reporting in the U.S., the CSA has concluded that these proposals will increase management’s focus on the quality of internal control over financial reporting and provide greater transparency to investors about deficiencies,” said Jean St-Gelais, chair of the CSA.

The comment period is open until June 28, 2007.

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Domestic barriers hinder international trade: Conference Board

(March 30, 2007) The Conference Board of Canada said on Friday that the ability of Canada’s diplomatic efforts to boost global economic performance will be hindered as long as domestic barriers to trade, investment and competition remain in place.

“Trips abroad to negotiate agreements with other countries or promote Canadian trade and investment put the cart before the horse,” said Danielle Goldfarb, principal research associate with the Conference Board. “Were Canada to eliminate barriers to competition, trade and investment within its control — from addressing infrastructure deficits to removing interprovincial barriers — it would be better positioned to take advantage of global trade and investment opportunities.”

The Conference Board points to the British Columbia–Alberta Trade, Investment and Labour Mobility Agreement, which takes effect April 1, as a good example of eliminating trade barriers. Once TILMA is implemented, businesses will have to register in either province, but not both.

Using recommendations from the Organization for Economic Co-Operation and Development and the World Trade Organization, the Conference Board recommends that Canada continue to streamline trade, particularly in areas such as harmonizing regulator standards and processes between provinces and dismantling border policies, transportation restrictions and government purchasing restrictions.

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(03/30/07)