Newspaper article The Christian Science Monitor

Canadian Bank Anticipates Long, Tough Recession

Newspaper article The Christian Science Monitor

Canadian Bank Anticipates Long, Tough Recession

Article excerpt

UNEMPLOYMENT is up and so is inflation. Manufacturing jobs are disappearing by the tens of thousands, housing sales are at an eight-year low, and property values are in a nosedive. Retail sales fell 4.2 percent in November, the largest drop since 1971. Interest rates are 5 percentage points above those in the United States.

The result in Canada is a deep recession. Some areas of the country are being hit harder than others. In the last recession in 1982, it was the resource-based provinces of western Canada. This time the manufacturing provinces of Ontario and Quebec are being hurt most.

"We have had eight good years, particularly in Ontario. The party's over," says John Clinkard, senior economist with Canadian Imperial Bank of Commerce.

The bank predicts a long recession with unemployment peaking at 10 percent - from its present 9.1 percent - before the economy starts a recovery, probably in the third quarter of 1991.

Quebec, relying on such industries as textiles and shoes, is affected more than Ontario, with its broader manufacturing base.

The unemployment rate in the Montreal area, which has some 2.9 million of Quebec's 6.5 million people, was 11.7 percent in November.

The unemployment rate in Toronto, a city of 3.4 million in neighboring Ontario, is just 6.7 percent.

"I find these statistics (on Montreal's unemployment rate) absolutely catastrophic," says Nycol Pageau-Goyette, president of the Chamber of Commerce of Metropolitan Montreal. She calls for federal government assistance.

"It is time the Canadian government changed its monetary policy," says John Gardiner, a senior politician in Montreal's City Hall.

There seems little chance that the federal government will provide aid to hard-hit regions.

But the Bank of Canada has eased somewhat its anti-inflation, tight-money policy. …

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