Euro-zone crisis is stunting Canadian growth

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Canada will be directly affected by the Euro-zone debt crisis this year, with their economic growth predicted to reach a modest 0.6% largely as a result of the problems in the troubled continent.

In 2011, the Bank of Canada predicted that the Canadian economy grew by 2.4% in 2011, which was considerably high in comparison to 2010’s figure of 2.1%. Although the economy is set to experience a 2% decrease this year, 2013 is looking more promising with a forecast of 2.8% regarding economical growth.

The central bank said; “Deteriorating economic conditions in Europe have a relatively modest impact on the foreign activity measure, given Canada's limited direct trade links with Europe, and will affect Canadian exports primarily through their spillover effects on US private domestic demand.”

However, according to the bank, due to Canada’s financial conditions, confidence and global commodity price, the crisis in Europe is expected to indirectly impact on the Canadian economy going forward.

These predictions made by the bank are based on the belief that the European crisis will be controlled by the methods taken by the European Central Bank, Germany and France.

Despite the Euro-zone crisis, domestic factors such as consumer debt and the volatility of the real estate market threaten Canada’s economy. These factors have led some business analysts and economists to view Canada as a “housing bubble” which has been created by low mortgage interest rates and assumption.

The bank concluded by warning that "if there were a sudden weakening in the Canadian housing sector, it could have sizable spillover effects on other areas of the economy.”

Transferring money to Canada

If you are looking to invest in Canada, think carefully about how you will be transferring money to Canada. Foreign currency exchange rates quoted by banks are almost always worse than the exchange rates available through specialist currency dealers.

So if you are looking to send money overseas, to Canada for example – which you will inevitably have to do if you are looking to make a property investment - be sure to compare the market before you buy your overseas currency.

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