December 2011 Canadian Economic Fundamentals

[Ally]

Slow growth to clip housing prices by 5%




Canadian home prices are likely to drop 5% in the first half of 2012 as the economy slows and could slide as much as 10% if the unemployment rate rises above 8%, economists at Bank of America Merrill Lynch said.




Ryan Bohren and Sheryl King warn the market is overvalued and flooded with supply.




The economists have taken a bearish stance on the real estate market before, warning of a possible 15% correction to the Toronto condominium market in an October report.




In their 2012 outlook for housing released Friday, Mr. Bohren and Ms. King noted that while Canada is somewhat shielded from the situation overseas, it is not immune to the European turmoil and the economic fallout here could worsen if unemployment creeps up to 8%.





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[Ally]

The Legatum Prosperity Index



'Ranks countries according to health, safety and security, governance, economy, social capital, etc. Canada was ranked the 6th country in the world.





View the full list of rankings here.

 

[Ally]

Fewer jobs, income for newcomers



VANCOUVER ` Higher-than-average education levels have not spared new-comers to Canada from experiencing higher unemployment rates and lower incomes than their work colleagues who were born in the country, according to the Royal Bank of Canada.





If immigrants' skills were rewarded in a manner similar to that of Canadian-born workers, it would have resulted in $30.7 billion in increased incomes, the bank found in a study that examines the immigrant labour market gap.





"It is a big number," said Dawn Desjardins, RBC assistant chief economist, in reference to what she called an "untapped" economic contributor.





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[Ally]

Housing correction big risk for Canada




The Canadian housing market is at risk of a price correction and remains the chief domestic vulnerability to the country`s economy in the new year, according to two new reports.




They warn of an overvaluation of Canadian housing by 10% to 15%, aggravated by rising levels of household debt.

Entering a year laden with potential global economic shocks, Canadian authorities need to beware of housing risk as the chief domestic risk, the International Monetary Fund warned.





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