Currency exchange rates are intrinsically linked to the global economy. That’s why every week at theCurrent we bring you the world’s biggest business stories. This week: The consequences of a Brexit could be disastrous says Mark Carney and the IMF, US retail sales rose, Bombardiers bailout stalls, Vancouver’s mayor calls for a tax on foreign property buyers, and the Alberta wildfire hits Canada’s GDP.
Fears over Brexit
Mark Carney, the Canadian Governor of the Bank of England, and the IMF both said this week that if the UK left the EU there would be serious economic consequences. Carney suggested that a vote to leave the EU could cause a recession. Christine Lagarde, the IMF chief, meanwhile claimed that the consequences of a UK exit would be “pretty bad, to very, very bad.” On June 23rd British citizens will vote in a referendum to determine whether the UK stays in the EU, or leaves the union. The move could have serious consequences for travellers, in addition to economic concerns. (Source: http://www.theguardian.com/politics/video/2016/may/15/mark-carney-defends-brexit-intervention-eu-bank-england-video)
US Retail Rise
US retail sales rose by the largest margin in over a year in April. The surge of 1.3% was driven largely by a 3.2% increase in car sales and a jump in online sales, making April the strongest one month gain since March 2015. Overall sales numbers exceeded expectations but there are some worrying signs. Four of the country’s biggest department stores, Macy’s, Nordstrom and JCPenney all suffered a fall in sales. (Source: http://www.wsj.com/articles/u-s-retail-sales-in-april-grow-at-best-pace-in-more-than-a-year-1463142745)
Bombardier Hits a Wall
Talks with Bombardier about receiving federal financial aid have hit a standstill. Quebec has already promised the manufacturer a $1.3 billion cash injection into the company’s troubled CSeries jet program. The federal government proposed a plan in which Quebec and the Canadian government will each contribute $1 billion, to be matched by $1 billion raised by the company from selling shares. However, disagreement arose regarding the company’s current dual-class share structure. (Source: http://www.theglobeandmail.com/report-on-business/bombardier-talks-stall-on-trudeaus-3-billion-pitch-sources-say/article30016968/)
Vancouver Housing Shakeup
Vancouver Mayor Gregor Robertson has called for foreign property buyers and speculators to be slapped with a special tax. House prices in Toronto and Vancouver have soared, with many Canadians blaming foreign investors. Facts are hard to come by, as BC only recently introduced steps to collect the residency information of buyers, and StatsCan has dedicated $500,000 to increase the scope of data it collects on the housing market. (Source: http://business.financialpost.com/personal-finance/mortgages-real-estate/is-it-time-to-tax-foreign-property-owners-cibc-economist-weighs-in)
Cost of Alberta Fire
Damage and disruption caused by the Alberta wildfire has prompted economists to cut Canada’s GDP forecast for 2016. TD knocked its prediction down from 1.9% to 1.6%. 0.2 percentage points were attributed directly to the fire, while the remaining 0.1 percentage point was unrelated. BMO lowered its forecast from 1.8% to 1.6%, blaming the wildfire and poor economic indicators. CIBC’s outlook dropped from 1.6% to 1.5%, due to the Alberta wildfire. The fire is costing the oil sands $70 million per day. (Source: http://business.financialpost.com/news/economy/big-banks-shave-2016-growth-outlooks-for-canada-in-wake-of-alberta-wildfire)
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