It’s one thing when a Canadian observer gives the Canadian economy a vote of confidence. It’s quite another when an outsider does it. For some reason, it sounds more real when the compliment comes from someone with no conflicts.
The thumbs-up comes from Dennis Gartman, author of the influential Gartman Letter and, yes, the same man who slapped Alberta silly last year after the provincial government raised its royalty haul on energy producers in there. After that money grab, Mr. Gartman swore off the region – but the contrarian in him is warming up again now that a loose consensus of market watchers believes that Canada is going to be dragged down by the United States.
On Monday, the International Monetary Fund joined the consensus of naysayers, slashing its forecast for Canadian economic growth to 1.8 per cent in 2008, down from an earlier forecast of 2.4 per cent, pointing to the unsettled U.S. economy for its change of heart. The IMF added that the risks of a more serious downturn are growing.
“The IMF still strongly believes in the old thesis that if the U.S. economy gets a cold the Canadian economy shall get pneumonia,” Mr. Gartman said in his daily letter on Tuesday. “We do not, preferring the metaphor that if the U.S. economy gets a cold, the Canadian economy shall get a bad case of the ‘sniffles,’ but little else.”
His defence of Canada rests on two theories: that the market for Canadian trade is far more diversified than it once was, which means that it no longer relies on a booming U.S. economy for its health; and that the world continues to scramble for so-called ‘stuff’ – the sort of hard commodities that Canada, along with a select group of other countries, has in abundance.
“The simple fact is that the global economy remains quite strong despite weakness in the U.S., and the global economy needs the things that Canada, Australia, and New Zealand have in abundance,” Mr. Gartman said. “To complicate this issue is to... Well, it is to complicate the issue!”
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