One of the four deputy governors of the Bank of Canada was in St. John’s Wednesday for what he called an outreach visit.
Timothy Lane had a full agenda which included a meeting with provincial Finance Minister Tom Marshall, giving a presentation on the state of the country’s economy to the St. John’s Board of Trade at lunch, mingling with local business leaders at that event and speaking to two classes of Memorial University students.
He told The Telegram one reason for his visit is to gather anecdotal information and get a general sense about what’s happening locally, while also passing on what the bank is doing to help stabilize and expand the economy in the aftermath of the global recession.
“I’m hearing quite a lot about the resources development and the contribution that that is making to the economy of Newfoundland Labrador,” Lane said. “It really seems to be a game changer in terms of the economy and really a source of growth both now and also, I think, for a number of years to come.”
Lane said because this province’s economy is so resource based, the recession affected it differently than other parts of Canada. That was compounded by a number of resource-based projects that were put on hold for a period of months while markets remained uncertain.
“During the recession, in fact, the downturn was sharper in Newfoundland and Labrador than it was in Canada as a whole,” he said.
But Lane said the recovery was equally as dramatic here, once commodity prices rebounded and projects — like the Hebron offshore development — started to gear up.
“I’m hearing quite a lot about the resources development and the contribution that that is making to the economy of Newfoundland Labrador,” - Bank of Canada Deputy Governor Timothy Lane
Lane said while regional economic activity is important to the bank, it’s the overall state of the Canadian economy which is its focus.
Overall, he said, the country’s recovery from the recession is well underway.
“We’re back to the level (we were at) before the recession, we’ve regained what we’ve lost,” Lane said. “But we’ve also got the potential of the economy, which is growing as the labour force grows and as firms expand.”
He said it will still be a while before Canada catches up with its economic potential, but that gap is narrowing and the country will be back at its potential in the next couple of years.
Another sign of the recovery, he said, is that the private sector is starting to take the ball when it comes to investment, just as Ottawa starts to wind down its economic stimulus.
Lane described it as an economic “handoff” from public to private spending.
When it comes to learning lessons from the recession, Lane just returned from meetings in Switzerland and said other countries are looking to Canada’s strict oversight of banks while they investigate banking regulations and reforms.
The reforms are in the works, he said, so in the future banks and financial institutions in these other countries are better prepared for economic downturns, and won’t have to rely on government bailouts.