Despite the rising Canadian dollar and uncertainty surrounding NAFTA negotiations with the U.S., Finance Minister Bill Morneau is cautiously optimistic about the positive state of Canada’s economy. So far in 2017, the Canadian dollar is up 10.7% against the U.S. dollar.
Morneau spoke from Ottawa to the Bloomberg Canadian Fixed Income conference, which was recently held in New York City. “The current state of the dollar is a reflection of our positive economy, and that’s something that we expect as a ramification of doing well,” he said. “But we think that we can continue to be successful with that level of the dollar. It will clearly mean that we’ll have to continue to invest in productivity so that businesses are successful.”
He is also confident about Canada’s growth rate – 4.5% annualized in the second quarter of 2017 – despite some “one-time” factors which contributed to this growth. “While we can’t argue exactly what the rate will be on a sustained basis, we’ve done some things that have changed the trajectory,” he said.
Morneau recently met with U.S. Treasury Secretary Steve Mnuchin to discuss the U.S.’s and Canada’s mutual interest in NAFTA negotiations, and also claims the government will move forward with proposed tax reforms to address high-income earners who use incorporation to reduce their tax bills. “We’ve got some advantages that go only to a small subset of wealthy Canadians,” Morneau said, adding that the government instead wants the tax system to encourage Canadians to “invest in their active business.”
Also are on the table are the goals of reducing the ratio of Canada’s debt to its gross domestic product (GDP), as well as ongoing investments in infrastructure. “Having that great balance sheet is an advantage,” he said. “Investing in the long-term is an opportunity for us to make our country more productive. That’s what we’re going to continue to do.”