Economic perspective for 2009-2010: Peter Hall, vice president and chief economist with Export Development Canada dumbs it down.

• Author: Low, Andrew
• Position: NEWS

The Canadian economy is going to get worse before it gets better.

That was the message Peter Hall, vice president and chief economist for Export Development Bank of Canada gave to Northern Ontario's business community.

Hall delivered two breakfast talks in Sudbury and Sault Ste. Marie called Let's Talk Exports.

He told the audience that, as if the situation wasn't already bad enough, the worst of the financial crisis has yet to come.

"Growth is so slow around the world that no industry, no region is really exempt from the declines that we're seeing happening," he said. "It's not a good situation that we face right now and we're not going to get out of it quickly."

He spoke of the five waves of weakening.

In Wave One, a sequence of events unfolded when the housing market imploded in United States starting in 2006. There were way more homes than were needed. In a country where up to a million homes are sold annually the United States was down to less than half a million units.

"Any market that feels this, has excessive pain and it is going on everywhere right now."

In Wave Two, Hall explained the fallout in the United States including subprime numbers had a direct impact on other world markets. Couple that with the lengthy global upswing and it was a recipe for disaster.

A normal rise in economic activity lasts about eight years, but the one the world just experienced lasted for 16 years. Because economic growth is exponential during these periods, the economic downturn is far more severe after 16 years of growth than after eight, so "we are experiencing double the bubble. This is just not happening in one or two economies," he said.

"Globalization afforded these bubbles to be exported. The excess of activity that built up over the boom years is taking some time to wear off," said Hall. "We don't believe we're there yet. There is some optimism that's growing right now. We don't believe it has a fundamental reason."

Much of the workforce has never really experienced or lived through a recession, he said. These events are unprecedented and researchers have to go as far back to the Great Depression to find comparisons.

China says they are growing by 6.8 per cent but when one evaluates year-over-year or quarter-over-quarter, it is more like 2.5 per cent in the second half of last year, he said.

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