While the rest of the world is freaking out about Brexit
, or writing about how we shouldn’t be freaking out about Brexit
, or worrying that other countries will follow suit
, at least one country isn’t thinking about it.
That is mostly because Canada’s economy isn’t meaningfully affected by Europe’s. Only 3.2% of Canadian exports go to the UK, making up 1% of its GDP, and only 1.6% of its imports are from the UK. And the rest of the EU only accounts for an additional 4.4% of its exports.
However, Canada has other, more pressing things to worry about. The biggest one, according to a new research report from Capital Economics, is the possibility of Donald Trump becoming president.
“A Trump win [would be] very bad for Canada’s economy,” the report stated. A President Trump might push the US economy into a recession by decreasing public spending, or perhaps, in his push to increase protectionism, slash Canada’s exports. That political uncertainty close to home is a much bigger threat than the uncertainty across the Atlantic.
In addition to the political uncertainty in the US, Canada is facing some current economic problems.
Huge wildfires earlier this year slashed oil production and energy exports, when a quarter of the country’s oil was taken offline — a move that the Bank of Canada estimated would decrease real GDP growth by about 1.25 percentage points in the second quarter. Although the subsequent rise in oil prices should benefit energy exports in nominal terms, the report estimates that the trade deficit will deteriorate to $3.5 billion from $2.9 billion.
Moreover, Canada is also the midst of a housing bubble that has analysts worried. One economist noted that the increases in housing prices in some regions now “far exceed” those in the US at the peak of its housing bubble, and that the situation will “end in tears.”