Are we getting close to turning the corner on this prolonged recession and slow recovery that has hammered our economy for the past four years? That’s a question so many business owners are asking. Our country’s economic outlook has brightened since the start of this year as the U.S. recovery gains strength boosting confidence among Canadian consumers and companies.
Canada is benefiting from generally improved global conditions, but there are still risks that could derail our fragile recovery.
The Bank of Canada recently reported that Canada’s economic picture has improved in recent months and boosted Canada’s economic growth forecast to 2.4% growth and hinted strongly that it may be ready to start bumping up interest rates soon.
However hiking borrowing costs can also pose risks for our economy burdened with high household debt, a strong dollar, soft export markets and weak employment growth.
The central bank has issued repeated and urgent warnings about household debt levels as the biggest domestic risk to our economy. Unlike the United States, Canada experienced a post-financial crisis with an inflated housing market rally that was triggered by record low borrowing costs. This in turn fuelled higher debt levels at a time when real wage growth remains sluggish. For many Canadians a rise in mortgage costs could be the tipping point as they to try to cope with high lines of credit on their homes and maxed out credit cards.
Despite the coverage of the household debt situation, there are signs business confidence is rebounding. In the US, for example, a newly released report by the National Association for Business Economics reports 78% of companies are upbeat and anticipate the U.S. economy will expand by over 2% and they plan to take on more workers as business improves. When the economy in the U.S. improves, ours recovers along with it.
The situation in Europe with the recent elections in Greece where there is no clear government majority to provide economic direction and in France where a Socialist government was voted in have caused concerns in international markets. It may take a few more months to determine if indeed an economic recovery in underway in North America. However we urge you to be proactive and not be left on the sidelines waiting for the right time to upgrade your business, hire new staff or buy new equipment.
Plan on the future now and reduce your financial exposure by insuring your accounts against bad debt through Veri-Cheque’s Account Receivables Protection Plan. It’s certainly a very good business strategy to look ahead to grow and protect your business. I invite you to give us a call to get more information about how we can help with your business plans for the future.
President, Veri-Cheque Ltd.