##winds faced by non - energy exporting companies, especially manufacturers. added to this was the pain inflicted on manufacturers across advanced economies by the great recession that followed the financial crisis. here in canada, the crisis lowered the temperatures of both the energy and manufacturing tracks of our economy. but due in part to the magnitude of the hit felt south of our border and to the severe impact felt by the u. s. sectors important to canadian manufacturers – including its residential housing sector and auto production – the crisis was particularly hard on our manufacturing exporters. many manufacturers and manufacturing jobs simply disappeared. for the sector as a whole, the recovery has been a long time coming. together, the two shocks – the terms - of - trade shock and the crisis – have walloped canada ’ s manufacturers. now, the world recovery is beginning to get under way, which will relieve the pressure of the shock of the crisis. however, the forces related to the changing terms of trade will continue to be felt, even as the global recovery proceeds. one shock is going away, but the other continues. competitiveness challenges have prompted many canadian manufacturers to become more productive. some have streamlined their activities, introduced new products and services, entered new markets, and invested in cost - saving technologies. others have outsourced product fabrication, but invested in product development and sales and service for new markets. we have seen gains in productivity among those manufacturing subsectors in which canada has natural advantages, including primary metals, wood products, paper, and food. since 2002, the greatest increases in manufacturing output per worker have occurred in these industries. bis central bankers ’ speeches we all know canada ’ s is an export - driven economy. growth since the crisis has been fuelled by policy, not natural forces. we need our economy to shift gears and for exports to lead again. the importance of manufacturing to the economy and, in particular, manufacturing exporters – and the growing wedge between our export performance and foreign demand – led the bank to dig a little deeper to better understand the dynamics of what ’ s happening. to do that, we broke down the non - energy export sector into 31 subsectors and investigated at this more detailed level. we are discovering that, for many of these subsectors, exports have been behaving broadly in line with the fundamentals of foreign activity – or even better. for them, business is heating up. subsectors that are expected to thrive as u. s. investment picks

tiff macklem : opening statement before the house of commons standing committee on finance opening statement ( delivered virtually ) by mr tiff macklem, governor of the bank of canada, before the house of commons standing committee on finance, ottawa, ontario, 3 march 2022. * * * introduction good afternoon. thank you for inviting me here as part of your study on inflation in canada. i ’ m pleased to have senior deputy governor carolyn rogers with me for her first appearance before this committee. since i was last here, the bank of canada and the government of canada renewed our joint agreement on canada ’ s monetary policy framework. we agreed that the primary objective of monetary policy is price stability. under the 2022 – 26 agreement, the cornerstone of our framework remains the 2 % inflation target, at the midpoint of a 1 % to 3 % control range. and earlier today i spoke to the cfa society toronto, where i explained our policy decision yesterday to raise our policy interest rate by 25 basis points to half a percent. i also reviewed the drivers of the recent rise in inflation globally and in canada. i know this is directly relevant to your study, so i have given my remarks to the clerk to share with committee members. i look forward to further exploring these issues with you today. before moving to your questions, i ’ d like to talk to you — and canadians — about three things. first, i ’ d like to review the bank of canada ’ s actions over the course of the pandemic : what we were trying to achieve, what happened and what would have happened if we hadn ’ t acted. second, i want to speak to the concerns many canadians have about the rising cost of living. i know many people are worried about prices at the gas pump and the cost of groceries, housing affordability and how to save enough for retirement. and that angst has been compounded by everything we ’ ve gone through over the past two years of this pandemic. third, i want to talk about what ’ s next. this latest wave of the pandemic is fading, and life is starting to return to normal — or a new normal. i want to share what canadians can expect to see in the economy, with inflation and from the bank. the bank of canada ’ s actions at the onset of the pandemic, uncertainty skyrocketed, financial markets seized up and economic activity fell off a cliff. about 3 million canadians lost their jobs and