Road To Stability Littered With Obstacles

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    Global economic and financial issues remain sizable and the road to greater stability is littered with obstacles, says the Desjardins Group economic studies team. China is raising concerns, the United States fears a fiscal cliff, the euro zone is in recession, and Canada’s growth drivers are weakening, it says. In Canada, the pillars for growth are dwindling. Consumer spending on goods is being slowed by the rebalancing of household budgets, while exports are being hurt by the lethargy of trade partners. As well, government expenditures are declining due to the budget cuts by the federal and provincial governments. The key event of the summer was the promise from the president of the European Central Bank (ECB) to do everything necessary to preserve the euro. It is in this context that the ECB can now make unlimited purchases of bonds from countries that have asked for help from the bailout fund so as to ease the financial pressures on these countries. On the other hand, there is still a lot to do in this region to stabilize the situation. China’s economy is of increasing concern and other stimulus measures are on the menu. All of this, it says, suggests that the central banks will hesitate to raise their key rates for several more quarters, with most still trying to stimulate growth with increasingly bold measures.