Aron Gampel, the deputy economist at Scotiabank, spoke at the CanaData construction industry forecast conference in Toronto on September 22 in Toronto about the economic outlook for the U.S., Canada and the world.
Gampel said that going around the world, there's a "level of discontent" because economies are underperforming. Growth rates are slowing with developed countries. Developing countries, such as India, China, and South Korea are growing but at a slower rate and Brazil is going backwards.
"It's a glass half full, half empty scenario," Gampel said, because Canada is doing a reasonable job of growing in somewhat extreme circumstances, with a collapse in construction activity in several provinces and a serious decline in commodity prices.
Even though the United States has a sunnier outlook, they are only growing at a rate of approximately one per cent.
But Ontario (specifically around Toronto) and British Columbia (specifically around Vancouver) are growing at an accelerated rate compared to the rest of the country.
There is "insufficient aggregate demand reinforced by structural and cyclical factors," Gampel said, with structural economic adjustments, debt and deleveraging, oversupply in product markets, and low inflation and deflation. There is also a slowdown in international trade, as well as financial and currency market volatility and geopolitical instability around the globe.
We also face a labour problem due to an aging workforce, he said, which also slows growth.
This has also been a historic decline in commodity markets, due to oversupply and also because "we are in the process of a series of mergers and acquisitions, and that takes time to do."
This is also a much different world for the financial side, Gampel said, due to a new regulatory environment. In many parts of the world, the banking sector was lax in its fiduciary responsibilities and faced little regulation, and "we have gone from one side of the ship to another," he said.
Geopolitical factors include terrorism and political instability, but also the rise of populist political movements in the United States and Europe.
But on the positive side, Gampel said, there is solid U.S. led domestic growth, and China's growth has stabilized at present. Oil prices are still low, interest rates are very low, and currencies have been realigned. Some nations are increasing fiscal stimulus, and trade deals are waiting to be signed.
The missing link, Gampel said, is confidence. There is an urgent need to increase productivity, he said, but businesses "just aren't doing it."