The Goderich Signal-Star, 1974-11-14, Page 9Canadian
mperial Bank of Commerce writes........,
vises counfr
GODERICH SIGNAL -STAR, THURSDAY NOVEMBER 14, 1974
steer the mi
.
The Canadian economy has tries facing difficulties in finan- payments deficits over the short should begin to recover
r
oe k
rts ely to
entered a period of slow real cing their oil deficits. In ad- term. remain .relativHowever, imporly
ts ton; par -
growth, with weakness in a dition, various surplils coun- Our main trading partner, titularly machinery and equip -
number of key sectors. At the tries have made bilateral credit the United States, experienced ment for plant expansion.
same time, ,rapid inflation is arrangements with deficit coun- a contraction in real output in These teds, and some
continuing and wage/cost tries, and special `efforts are the first half of the year. hese tion n ins, the terms of
pressures are intensifying., being made to encourage the However, inflation remains a trade will produce further wor-
This kind of situation is by re -flow of funds from the major problem and it appears, sepias of { our trade balance in
no means unique in the current Organization of Petroleum Ex- that them' nistration , is 1975
international Mcontext, where porting Countries back to prepared to fight it by main- Government spending will
the . synchronization of deficit countries. taining a restrictive monetary
at well the
deflationary policies among the ' Substantial capital flows will policy and by exercising againof rise at of the abovethe
major countries -- both to fight be generated in the process of significant restraint with rateas a of gr
$oto the provincial
inflation 'and to assist in financing the. oil deficits and regard to government spending. and federal s,pen the provincial
solving balance of payments world financial markets will Given this policy stance, it is imply major increases in
to outlays.
Turning to prices and wages,
the deceleration in food costs
which had been expected to
in n
problems — appears to have undoubtedly continue in a state unlikely that a recrlvery
caused a marked -and Tong- of flux,."as massive amounts of economic growth will soon °c -
lasting slowdown of world funds are switched from one cur. A decline in real growth is
trade and economic growth. market to 'another: expected for the year 1974 as a
ri n rise
moderate the rate of increase t
outlook are strongly influenced problem'which all countries are real output in the' neigh- the Consumer Price Index this
by developments abroad, it is being faced' with at present is bourhood of only `two per •cent year has not come about.
useful to `examine briefly the that of an exceptionally high' is expected. However, indications are that
growth prospects of our major inflation rate.• A slightly lower rate of in- most of the oil -related. !ice
trading partners. likely f r 1975 with k d
THE INTERNATIONAL"
SETTING --
The world • economy' is now many basic commodities, such in consumer expenditures in
-experiencing the impact of the as lumber, iron and steel, and 1975.
huge increase in the cost of oil copper, brought about by the Spending on durable goods,id
hich has not onl contributedacceleration rn
Since our own situation and Another serious, economic .whole, and in 197.
and this situation is likely to
prevail through next year.
On the fiscal side, the policy
of the federal government must
be viewed as expansionary
through 1974. In calendar
1975, the government is expec• •
ted oto remain in a deficit
position in spite of a rapid in-
crease in revenues.
The high rate of redemption
of Canada Savings Bonds since.
early May has reduced the
government's cash balances by
more than $1 billion `and,
taking into account new expen-
ditures as well as increased
wage and material costs, total'
cash requirements' for fiscal
1974-1975 may exceed the
earlier $2 billion estimate. ,
Financing needs of . this
magnitude will exert pressure
upon the `financial markets
through early 1975. This and
The •main cause ` of rapicjly flation is o Changes will have ware the expectation of continued in-
.. rising prices has not been the an over-all increase of about 10 through to the retail level by flation imply that long term in=
increased cost of oil, however, per cent in the GNP price in- the end of the year. serest rates will remain at a
but the • Wage settlements for the high level.
balance of this year and
through 1975 are expected to INDUSTRIAL AND REGIONAL
average much higher than in OUTLOOK
demand which notably automobiles, should be recent years. 'This will, of The "slowdown in the rate of
w y
to the highest rates of inflation occurred as the industrialized stronger, and residential COn course, tend to narrow profit growth in the Canadian
for many years, but has also countries expanded rapidly up ' struction is expected to recover. margins and to provide some economy in 1975 will not be
produced massive tr,ade to„+the end of 1973, and The effects of the slowdown in additional pressure on prices reflected evenly throughout the
deficits, a shrinking in 'the aggravated by limited produc- the United States have already from the cost side. On balance, different industries and regions
volume of• trade, and a disrup- tion capacity for these com- been felt in Canada; the the over-all rate of inflation is of the country. Most industries
tion of world financial markets. modities. volume of Canada's exports to expected to decline through • and provinces which depend to
This has occurred at a time The prices of som ' com- the United States dropped by : 1975, to perhaps around nine a large degree on exports will
when the real rate of economic modities have begun 4b come about eight per cent in the first 'per cent, which will still be very continue t`h feel the effects of
C t oriel the general slowdown in world•
growth slowed in most countries, and the prospects for and further price declines are showing declines 'were lumber, With respect to the policy
chemicals,
high by •historical standards. ep
trt
A ►It ' 9
1975, and indeed there may he
declines in some commodity
prices.
The near-term outlook for
the forest products industries,
particularly the lumber in-
dustry, remains rather uncer-
tain (in the light of the curren-
tly depressed U.S. housing
market), at least, until the
second half of 1975. The
mining industry (excluding oil,
gas and coal), is not likely to •
experience the large price rises
of 1974, and some mineral
prices may even how a ten-
dency to decline next year.
British Columbia', Ontario,
Quebec and the Atlantic
Provinces will be most affected
by these trends. Oil and natural
gas production and exports in
1975 may _ be little changed
from 1974, and although oil ex
port prices may not rise, 'both
domestic and export gas prices
will increase. The volume and
value of coal exports should
also rise.'The Alberta economy
will continue to "4benefit from ,
the increase in the cost of
energy.
Although the 197.4 Canadian
wheat crop is expected to be
lower than last year's, and
world wheat prices are not ex-
pected tq•- rise markedly, farm
cash income in the Prairies will
still. be relatively high in 1975.
However, meat producers
will probably continue to suffer
from high feed costs and
flitting forces next year, with
CONCLUSION
continued high demand for ton- The period ahead will clearly
struction materials, such as. continue to be a difficult one
steel, and for heavy industrial for most countries, with uncer-
machinery and equipment. tain growth prospects, high
Also,. motor vehicle sales will rates of inflatiofi kept going by
probably increase modestly in a wage -price spiral, as well as
both Canada and the United substantial and , unevenly
States in 1975, causing distributed balance ' of
domestic shipments and ex- payments deficits. -
ports of motor vehicles and . While Canada does not face
parts tq rise. the problem of a conflict bet -
"On the other hand, consumer ween internal and external
goods, .manufacturers will balance to the same extent ' as
probably see a decline in sales many other industrialized
of household products, par- countries, difficult choices will
titularly durables, because of have to be made as to the
the slowdown in housing con- degrees of priority we give to
struction. The Ontario economy growth and price -stabilization
will be affected most by the objectives respectively.
relatively weak • demand for Until recently, Canadian
manufactured goods in 1975. fiscal policy has tended to be.
Capital investment will con- expansionary, on balance,
tinue to provide a major placing the main burden of
stimulus to most provincial restraint. on the Bank of
economies over the next few Canada. Some. shift in this
quarters, increasing production policy mix towards fiscal
capacity in a number of in- restraint appears desirable, by
dustries. Substantial invest- keeping expenditures under
ment is occurring in resource- • control, combined with
based industries, in secondary moderate ease on the monetary
manufacturing, in trade, side.
finance and commercial ser- Such a change in policy em-,
' vices, and in transportation, phasic would serve to stimulate -
storage and communications. investment growth and to ease
Ontario, Quebec and British the pressures on financial
Columbia_ • will benefit most markets generally.
from this expansion, and con- As far as, the over-all, policy
tinued development of the tar stance is concerned, an expan-
sands and other energy-related sionary approach would most
projects will continue to strain certainly exacerbate our in-
• Alberta's human resources. flationary problems, .while
Of the Atlantic Provinces, significant restraint could
h if f this year Categories g
trade, particularly .the depressed meat prices. Other only New Brunswick is likely to easily make for a prolonged
major improvement „ in thelikely several, metals, the p recession.
a P in 1975. outlook, the Bank of Canada depressed state of the U.S._ farm produce prices ate likely see significant expansion l i e in
However, •wa a rates are petroleum products, and to remain high, at least until capital investment, although Therefore, to steer a middle
economic environment in 1975 g has in recent months main- economy: g g course will probably serve us
are not encouraging. �xising •.sharply, as workers at- automotive equipment. and tained a policy of seeking After the sharp rise in 1974, the second half of next year, work may begin on refineries to best under present' circerve u -
tem t to recouplosses from in- Parts. Newfoundland and ova
A serious problem .for most P � moderate, accommodative rates export prices are not expected � The manufacturing i n -
countries is how to pay the flation, and this suggesxs con- of growth of in dustries will be subject to con- Scotia in 1975 ccs•
timed demand-side pressure CANADIAN PROSPECTS
much higher bill for oil im- not ex erience,
h has1 d down,as demand has fallen off, a o is ye
ports. The Organization for on prices. Over -all, -the rate of Canada didP
Economic • Co-operation and inflation in • 1975 should be an "oil crisis" in early 1974,
Development estimates that its marginally lower than in 1974 and our policymakers did not
member countries will probably in most countries. have to deal with a major
be in deficit by some $40 billion Forecasts show real output deterioration in the balance of
„ in 1974, compared with a sur- growth in• the major industrial payments.
plus of about $41/2 billion 'in countries for 1974 and 1975.. , _. However, they. have had to
both 1972 and 1973. -European Unlike 1974, all economies are contend with , the world-wide
countries are seriously affected,
expected to grow in 1975. West ` phenomenon ofhigh price in-?,
particularly Britain, Italy and Germany will probably improve nation, and growth has
France, -as well as -Japan and on this year's performance, and ..,,slackened, in part reflecting the
the less-developed, non -oil Japan is expected, to recover slowdown in other 'major coun-
producing countries outside the from' a sharp decline in 074. tries. In particular, the rather
OECD. Britain is likely to regain its tough anti-inflationary
1973 level of output, while measures adopted "by the
In view of the magnitude of United States government have,
theproblem, certain actions France is expected to ex-
a erir ce further' slowing' inti, reduced the prospects for rapid
. have',been taken to mok�iljize,�,nl�,p ,.�� '��
ternational capital.. flows to: growth through 1975. growth in Canada through the
facilitate financing of the 'These forecasts are based.on next two' to three quarters.
current account deficits. the assumption that authorities On this basis, we forecast an
For example, the IMF has in the countries concerned are increase in real GNP of some
established a special fund of not over restrictive, and -are four per cent this year, and of
about $3.4 billion to aid coun- , prepared to live with balance of about 31/2 per cent in. 1975. A
further increase in the rate of
unemployment is implied by
this forecast, although serious
• shortages of skilled Workers are
inLonesboro
trades and regions.
Forecasts of, the components
of Gross National Expenditure
Pots of yellow chrysan-f>Oer-length gown of floral are included in the tables on
themums made a lovely setting polyester crepe, -white ac- the following pages. As in the
in Londesboro United. Church cessories• and a corsage cif
carnations. current year, a source . of
when Larry James Johnston of yellow
Willin strength in the economy in. 1975
and Linda Jean Sproul of For a wedding trip to Kim- will be capital investment, with
RR 3, Auburn exchanged wed- berely, Ont., the bride donned a a N further rise expected in
jacket dress of red floral business investment in
ding vows before Rev. Stanley
polyester crepe, white ac- buildings and machinery..
McDonald in a double -ring
ceremony. cessories and a corsage of white Residential construction -4s an -
The groom is the son of Mr. carnations with red ribbon. Mr. ticipated to continue to be a
Blyth, and the bride
and Mrs. Stewart Johnston of and Mrs. Johnston have taken source of weakness through the
is -the U residence in Blyth. first half of next year.'
daughter of Mrs. Elmer Sproul P Through early 1975, growth.
and the late Elmer Sproul, RR Prior to her marriage, Linda,, in they' volume of consumer
3, Auburn. Mrs. Barbara was honoured with an Auburn, spending, particularly far non -
Bosman was the organist. ' Community shower in the Sun- essential and housing -related
The bride chose a floor- day school room of Knox items, is expected to he rather
length Mori -Lee gown of white United Church, at the home of slow. However, some ac -
sheer crystalette, bib front with Mrs. Gordon Martin, Port celeration in consumer expen-
Small gathered ruffles, sand long Albert and Mrs. Mark Kennedy ' diture is likely towards the
straight sleeves. Her long at Londesboro`. Mrs. Elmer second half of next year as real
the
money
supply,
to
show
much
of an
ncrease
cathedral train, caught at the Sproul heli a trousseau tea for
waist -line, ways edged with mat- her daughter prior to' her
thing gathered frills as well as marriage. Mrs. Lynda McNee,
the bottom of they gown. Her Mrs. Lynda Kennedy and Mrs.
headdress of a cluster of white Marie "Johnston served the
• roses and lace edged ,with seed guests and the trousseau and
pearls held her four -tiered gifts were shown by Mrs.
She carried a cascade bouquet
sculptured veil of silk illusion. Sproul and Linda,
-e of pink sweetheart roses, white
carnations and stephanotis ent,
wined with white ribbons.
Mrs. Lynda McNee of
Dungannon was matron of
honour. and the .bridesmaids.
were Mrs. Lynda Kennedy of
Londesboro and Mrs. Marie
Johnston of Clinton. They were
dressed in floor -length gowns of
blue polyester crepe with em -
pi -re waistlines, long puffed
sleeves -and trimmed with white
lace. They carried bouquets of
.pink Carnations and white
daisies with matching
miniature carnations and white
daisies in their hair. The
groomsman was Murray Walsh
of Blyth,. the ushers were
Wayne Johnston of Petrolia
and Bill Sproul of RW 3,
Auburn.
For a reception which
followed in the Clinton Legion
Hall, the bride's mother
assisted the wedding party in
receiving the guests wearing a
floor -length gownof purple
nolyester crepe, black ac-
cessories and a pink .carnation
corsage. She was assisted by
the groom's mother wearing a
incomes rise in the- wake of
wage and tax adjustments and
some moderation in the rate of
price .inflation, -
'No improvement is expected
in export volume until well into
next year, 'when the economies
d
of our ,major trading partners
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