Good morning, Mr. Chair.
I should first of all point out that I'm not a forecaster. What I'm going to tell you is based on my feelings, my experience and my understanding of the laws of macroeconomics.
Basically, there is no doubt in my mind that we are heading toward an economic recession or, at the very least, toward a period of almost zero growth. I think that we are going to see what I would call the "Nipponization" of the western economy, meaning that we would have close to zero growth or negative growth for several years.
For several months now, we have seen that all the large agencies are revising their forecasts on economic growth downward. Based on the consensus of the economists, the Department of Finance announced in the budget presented in March and in June a growth rate of 3% for this year and next year in Canada and the United States. When we read the most recent forecasts of the International Monetary Fund, we see that it has now gone from 3% to 2% for Canada, and 3% to 1.5% for the United States.
But we know that the forecasters are generally still too optimistic when the economy is spiralling downward. To give an example, as you know, the Lehman Brothers fell on September 15, 2008. Well, on October 13, 2008, the consensus forecast was still that Canada was going to grow at a rate of about 1% for 2008 and 2009, while in reality, Canada's growth rate in 2009 was negative 2.5%. For the United States, the consensus forecast for 2009 was that the growth rate would be 0%, when the United States' growth in 2009 was actually negative 3.4%.
But we have been going through a period of uncertainty, which is very similar to the one we had in 2008. In fact, every week we hear at least four or five news items that are stupefying or concerning. The United States economy is not really recovering. The budgetary consolidation plan that the American government wants to adopt is going to slow down economic growth, if it hasn't done so already. And the new recovery plan under President Obama has little chance of being implemented. So there is little hope there.
What's more worrisome is the situation in Europe that everyone has been talking about, particularly the sovereign debt crisis for countries using the euro. In May 2010, the European Central Bank stepped in and, for the first time, purchased government securities, something it had refused to do for the first 10 years it existed. A European Financial Stability Facility was created, but it is clear—and was already clear then—that it was too little too late. The crisis in Europe seems to be irreversible, especially since the European politicians think it would be better to focus on fiscal constraint policies. As the example of Ireland and the United Kingdom shows, these policies are not going to have the desired effect. I think there is a structural crisis for the euro zone. In fact, it was created on the hypothesis that there would never be a crisis and that the financial markets were always right. Now we know that the financial markets aren't always right and are in the middle of a crisis.
To conclude, Canada will not be able to magically escape the financial crisis when it is happening in Europe. When there is an earthquake in Europe, we in North America—the United States and Canada—will be hit by a tsunami.
Obviously, given our trade with the United States, we are going to be affected by this situation. So I think that the Canadian government must give up on its goal of balancing the budget for 2014-2015; it must give up on budget cuts that were already announced; and it must now implement a new recovery plan for infrastructure.