Although the U.S. credit crisis has spread north of the border, Canada’s tighter regulations and healthy financial system are insulating it from the more severe repercussions seen in the U.S. However, Canada cannot shield itself from the growing recession in the U.S.
The hemorrhaging U.S. auto industry could wreak havoc in southern Ontario’s industrial base. The Canadian housing market also has taken a turn for the worse, although not as severe a downturn as in the U.S. market. Exports, long a source of strength for the Canadian economy, are on the decline due to the stronger Canadian dollar and weaker global demand. Finally, commodity prices, which up until a few months ago were providing a boon for the western provinces, are being threatened as global oil prices tumble from last summer’s record peak.