The Bank of Canada’s governor Stephen Poloz said that he expects Canada’s economy to overcome the setback caused by the plunge in oil prices and return to full capacity by the end of 2016.
According to Poloz, last year saw a large number of job losses in the Canadian oil sector due to the drop in the price of Brent crude oil from $100 to below $50. As a result, manufacturers of equipment for the oil industry were adversely affected, and housing and consumer expenditure experienced slower growth.
Poloz says that based on the recent figures that were released on May 29, Canada’s output in the first quarter has been “basically flat”. However, he predicts that following the January interest rate cut and the low value of Canadian dollar, the second quarter of this year would see the economy “rebound partially.”
Poloz also expressed optimism that the economy would be “back on track to reach full capacity around the end of 2016”.
However, Poloz has warned that the effects of oil price shock may take years to fade away. “The implications for income and investment (of low oil prices), and the adjustments they’re causing across sectors and regions, may take years to work themselves out.”