Mark Carney: Rebuilding confidence in the global economy

Good afternoon. These are very challenging times. The Canadian economy is in recession. The global economy is facing a crisis of confidence, triggered by the most severe financial meltdown since the Great Depression; fanned by sharp falls in trade, manufacturing output, and financial wealth; and intensified by steep increases in unemployment. In the throes of this crisis, fundamental certainties – about the structure of the financial system, the effectiveness of macro policy, and even the principles of capitalism – are being questioned. In this environment, Canadians from coast to coast to coast are more concerned about their economic future than they have been in decades. These concerns are understandable given the economic realities we face: unemployment has risen sharply, and the job market can be expected to deteriorate further before it recovers. The prices for our exports have fallen, our personal finances are under increasing strain, and our economy is currently shrinking. 

However, these concerns ought not be boundless. The Canadian economy has fundamental strengths, and has not been prone to the excesses that others have experienced. Moreover, globally and in Canada, policy-makers have mounted an aggressive three-pronged response to the current crisis. Monetary and fiscal policies have been eased substantially to support demand. Unprecedented measures have been taken to support the financial sector in order to keep credit flowing. And bold, longer-term reforms are being developed to create a more stable and efficient financial sector. If well executed, these measures will collectively begin to restore confidence and, with it, promote sustainable economic growth. 

My message today is simple: there is a plan to restore confidence and growth, we are implementing it, and it will work. The impact of these policies will build over time and will be significant. For maximum effect, it is critical that measures be grounded in robust and principled frameworks: the objectives should be transparent; indicators of success clear; and entry and exit criteria well articulated. Citizens must be able to hold their policy-makers accountable. Policymakers must rise to the occasion. 

Canadians can have confidence that the right policies are being put in place. They can manage their affairs in expectation – rather than hope – of a recovery. They can also expect that, once the global recovery begins, the Canadian economy will recover faster than many other industrialized economies. 

Unfortunately, the exact timing of the recovery is uncertain, and the global recovery itself may be more muted than usual. Since these factors depend to a great degree on measures taken outside our borders, the Bank is working intensively with our international colleagues to re-establish confidence in the global financial system. At home, our priorities are to cushion the blow of the global recession on the Canadian economy and to preserve our advantages so that we remain well positioned for the recovery when it occurs.