A senior ATB economist broke out the contents of his parents’ board game shelf to illustrate what 2012 will bring in the global, federal and provincial economies.
Todd Hirsch delivered his economic forecast for the year, couched in an entertaining medium with sobering messages of what could come in the next 12 months.
“It dawned on me that almost everything that’s happening can be explained by what takes place in the games’ cupboard,” Hirsch told the crowd Wednesday at the Sturgeon Valley Golf & Country Club during the St. Albert Chamber of Commerce’s monthly business lunch.
Globally, China and the emerging Asian markets are the most influential, according to Hirsch, which he likened to Twister, saying balance, youth and flexibility are the keys to success. While he acknowledged China’s unique economic structure affords it good balance, youth and flexibility could pose challenges. The country has been rigid in its approach to its currency despite demands by the United States to let it appreciate.
“But they do not have youth on their side. That is the result of the one-child policy of about 30 years ago,” Hirsch said. “They are aging and there are not enough young people coming to the workforce.”
The growing crisis in the European Union is of the highest concern, said Hirsch, where countries such as Greece, Spain and Italy are suffering under excessive debt. He likened the deteriorating conditions to a game of Kerplunk — pull a stick out and nothing happens, or pull out a stick and all the marbles come crashing down. Hirsch said Europe faces two possibilities in 2012 — a mild recession or a severe recession.
“Those are really the only two outcomes we are looking at in 2012.”
The crisis in Europe could trigger problems in the United States, a country slowly emerging from the last recession. Hirsch invoked the game Operation, saying the United States, based on labour and housing forecasts, was still trying to delicately manipulate the system to correct it, but had not yet killed the patient.
“I’m confident to say the U.S. will not be re-emerging into a recession in 2012, but growth in the U.S. in 2012 and beyond is likely to be mediocre at best.”
Canada is at the whimsy of the rest of the world, despite what Hirsch deemed sound financial practices, comparing the country’s economy to Ants in the Pants, requiring more luck than skill. He drew the same parallel to Alberta’s economy, which he says will see moderate growth in overall gross domestic product (GDP), but that external factors that drive the price of oil will be the determining factor. Alberta is Snakes and Ladders, he said, meaning a roll of the dice could drive oil up or down. The two proposed pipelines — Keystone XL and Gateway — are akin to Alberta playing Sorry!, with so many invested parties it is unlikely the province will get everything it wants.
“I’m not making a prediction that Keystone or Gateway will go ahead, but I think that nothing will be as straightforward as it has been in the past,” Hirsch said.
