CIBC’s Dodig Says Canada Can Avert an Uneven Long-Term Recovery


Canada will have capacity for stimulus programs to keep a rebound going even after massive government spending on the Covid-19 crisis, Canadian Imperial Bank of Commerce Chief Executive Officer Victor Dodig said.

Quebec’s subsidized child-care system should be a “blueprint” for the nation in helping women in the workforce, and the country’s tax-advantaged education savings plans could be adjusted to help mid-career workers acquire new skills, Dodig said in a speech to the Canadian Club of Toronto Wednesday.

While there is a danger of “getting enamored with an era of cheap money,” the government will still have the ability to spend on programs like that, Dodig said in an interview following the speech. Those initiatives will help spur the economic growth needed for a more balanced recovery, which would easily offset the spending, he said.

“Anything that the government can do to create policies or expand existing ones that actually encourage private-sector participation lessens the burden on the public load,” Dodig said in the interview.

During his speech, Dodig also warned that debt will eventually get more expensive, and he elaborated on how that may play out in the interview. One possibility is that Canada continues to run current account deficits that cause it to import inflation, he said. Another would be if Canada’s economic fundamentals stay soft and investors require more compensation for holding riskier debt, he said.

The preferred path for returning to a normalized rate environment would be for strong economic growth to generate natural inflation, he said.

Lower interest rates and government stimulus programs should spur an economic rebound in the short term, according to the CEO. It’s over the longer-term, from 2022 to 2030, that government policies and private-sector initiatives can help shape the country’s economic future, he said.

“You really want to make sure that the private sector and foreign direct investment are sources and resources for economic growth and that we’re not relying on more government debt,” Dodig said.

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