Bank of Canada (BOC) Governor Mark Carney made a bold statement in an interview with the British Broadcasting Corp. (BBC) recently. He said that he has done all he can to boost Canada’s economy and it is now up to business and politicians to increase economic growth. And who could blame him? It was his monetary policy that has kept Canada from succumbing to the financial woes experienced in other countries. The record-low prime rate has helped boost the domestic economy and has kept us chugging along while we wait for global economies to catch up. But we are nearing the end of what the BOC can do. It is, indeed, up to us.

The BOC can lower interest rates to spur more spending, mortgage lenders can lower fixed rates and discount variable rates (spreads permitting), but it may not be the prudent thing to do anymore because the economy needs reviving in other areas– namely infrastructure, small business investment and tackling the trade deficit.

Let’s take a look at infrastructure. Imagine yourself as the CEO of your country. Your bridges are starting to crumble. Your air-traffic control system doesn’t use GPS. Your advisers estimate that you will need to make more than $2 billion in repairs and upgrades.  But there’s good news, too. Because of the global slow-down, construction materials are cheap. So is labour. And your borrowing costs have never been lower. That means a dollar of investment today will go much further than it would have five years ago -- or than it’s likely to go five years from now. So what do you do? If you’re thinking like a CEO, the answer is easy: you invest. It’s a fast way to create jobs, keep the manufacturing industry happy and “stimulate” the economy.

In an interview with CTV, Carney said Canadians should quit worrying about the European debt crisis because it’s out of their control. “Canada has relatively little exposure to Europe, and the country’s banks are solid enough to withstand a worst-case scenario.” He went on to say that Canadians need to focus on growing the economy themselves and business, especially, needs to look at the long-term by developing economic relationships with major emerging markets.

“We can’t solve the euro crisis for the Europeans. We can’t fix the U.S. fiscal situation. What we can change is how productive our businesses are. We can change the markets into which we sell,” he said.
Bassett & Walker International (BWI) out of Toronto, Ontario is a good example of how Canadian business can tap into the surging growth in developing countries. BWI is one of only about 100 agricultural product brokers who collectively do half a trillion dollars in trade every year. Companies in other sectors are doing the same thing – there is enormous potential in emerging markets worldwide.

Carney also said that inbound capital flows are stronger because international investors see Canada as a safe place to park their money. But Canada isn’t taking advantage of that windfall, he said.

“Our challenge as a country is how do we use that capital that comes in? We can use it to grow our economy, invest in new productive assets in industries, or we can build houses,” he said. “Our view is we should do the former.”

Perhaps we can do both. As the economy grows, through investment by business and through infrastructure investment, more money flows, there are more jobs and consumers start looking at purchasing homes. Can Canada have it all? I think so.