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Canada's Economy Stars At G-20 Summit

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Canada's Economy Stars At G-20 Summit

World

Canada's Economy Stars At G-20 Summit

Canada's Economy Stars At G-20 Summit

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As leaders of the world's wealthiest nations gather for Friday's G-20 summit in Toronto, some of them might be just a bit jealous of their hosts.

Canada has come out of the financial crisis in better shape than most other rich economies. Its economy grew at a 6.1 percent pace in the first quarter — double the rate of the U.S. economy.

"The Canadian economy has really snapped back from the recession," Craig Alexander, chief economist at Canada's TD Bank, tells NPR's Steve Inskeep.

A number of factors helped Canada rebound.

"We saw once the global economy started to stabilize in the middle of 2009, commodity prices bounced back — and Canada is a big commodity exporter," Alexander notes. And the Canadian banking system, which was restructured after the deep recession of the early 1990s, "weathered the financial storm remarkably well," he says.

When the Bank of Canada matched the U.S. Federal Reserve's record-low interest rates, Canadian consumers and businesses took advantage of them. "At a time when unemployment was rapidly rising, people ran out and bought houses," he says. "And as you might expect, when you have a strong real estate market, that tends to filter through to strong purchases of furniture, appliances and home-related items.

"So we saw consumer spending, we saw housing really rebound quite sharply."

Strong regulation and conservative lending practices by Canadian banks also helped, he says.

"For example, every mortgage taken out in Canada is income tested to make sure you can make your payments," Alexander adds.

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