New Bank of Canada governor says consumers helped stave off recession

OAKVILLE — Canadians did their part to pull the country through the recession, now the burden of continuing the economic recovery must shift to business.

Bank of Canada governor Stephen Poloz made the comments during a speech to the Oakville Chamber of Commerce Wednesday. It was the first public statement Poloz has made since taking the job earlier this month.

By continuing to borrow and spend, the average Canadian helped stave off the worst of the economic downturn in 2008, he said. Now Canadians must pay back those debts and let exporters and Canadian businesses spend to grow the economy.

“I don’t really think there is a call to arms for consumers,” Poloz said. “Consumers have done a great deal to fill in the post-bubble crater which emerged after this recession. We built a lot of houses and bought a lot of cars and we spent and we took on debt in order to do it.”

Poloz said he believes consumers will heed the call now, repaying debt taken on during the recession, and will play a more “neutral” role in economic growth.

What will change is foreign demand for Canada’s exports, he said. Companies which once relied mainly on U.S. firms as customers were forced by the recession to look internationally for business. That has helped position them for recovery.

“They’re connecting to much higher growth rates there,” Poloz said. “I’ve seen that first-hand.”

Business spending will follow increased exports, as confidence grows, he said.

His predecessor, Mark Carney, had been critical of Canadian companies who sat on equity and did not re-invest it to spur economic growth, calling it “dead money.”

But those

firms

didn’t spend because they weren’t confident, Poloz said, preaching patience.

“They need to see that (export) demand — to have that confidence that this is for real and will last,” he said of the economic recovery.

Poloz would not comment on whether the Bank of Canada would raise interest rates, saying that it will soon begin its deliber- ation process.

Poloz, a former head of Export Development Canada, also stressed his GTA roots in during the speech.

When asked by reporters how to pronounce his name after the event, he referred to his hometown of Oshawa, Ont.

“Poe-laws,” he said “From the Shwa.”

smiling.