Canada's inflation rate is still low because of worry over the conditions of the U.S. government shutdown. The value of the Canadian dollar rose compared to the American dollar because of worry over the Federal Reserve's reaction. They were worried that they would roll back the tapering of the bond buying program. It also declined against most of the 16 other countries it is compared to. The Canadian Central bank also was forced to maintain most of its policies because its inflation is too low for them to try and get things back to normal.
It think that Canada is alternately lucky and unlucky to be the U.S.'s northern neighbor. They often have the bad luck of being hurt by economic downturn in the U.S. They get the positives as well but they are very much tied to how well the U.S. is doing because the U.S. is their largest trading partner.
http://www.bloomberg.com/news/2013-10-19/canada-dollar-declines-on-concern-u-s-adds-to-economic-slowing.html
I believe that Canada would be harmed a lot more than helped in the long-term economic and governmental situations. As it was explained, with the United States being the largest trading partner of Canada, they could potentially be impacted just as much as the United States in the event of a significant economic downturn, or in this case, the government shutdown.
ReplyDeleteI know the U.S. is their largest trading partner, but if they really have to rely that heavily on the U.S., then they should probably find more countries willing to trade with them. Even if our government shuts down for a little while, there's no way that should affect Canada that much.
ReplyDeleteI agree with Lem. Canada is the largest trading partner of Canada. If somehow, U,S. stops trading with Canada, all the goods that U.S. usually imports would have no where to go. Canada could find new trading partners, but the price of the goods would likely to be decrease since they're trying to get rid of them. This can impact Canada's GDP.
ReplyDeleteIt's kind of crazy how much power the U.S. has over other countries economically (even if we can't control our own economy). The fact that the government shutdown and whatnot has affected the value of the Canadian dollar really sucks. I'm kind of torn on what a good solution would be though, as the U.S. does lots of thing to support Canada as well. We're certainly not a bad influence (I think).
ReplyDeleteIt somehow deleted my first comment, but whatevs. Here we go again:
ReplyDeleteIt's kind of crazy how much influence the U.S. has over other countries in general. The fact that our government shutting down can change the value of another country's currency proves our place as a dominant power. In the end though, I don't think this is necessarily a bad thing for Canada. Sure, we devalued their dollar, but we also provide them with large amounts of trading and support.