demographics, not the product of the crisis. the more important question is whether any of the problems we see today will become permanent. this question is relevant at the global level, but let me illustrate it with direct reference to our own situation here in canada. historically, a typical recession / recovery cycle has taken a couple of years to complete. during the recession – let ’ s say it originates with a drop in export demand – companies cut back production, lay off workers, and investment and consumption spending fall. monetary and fiscal policies respond, exports recover, companies rehire their workers and move production back to normal. but this cycle has not been a typical one. the downturn was deep and has proved to be long lasting. canada ’ s export sector not only cut back on production and laid off workers, many companies restructured, many simply disappeared. recent bank of canada research on exporters sifted through more than 2, 000 categories of underperforming, non - energy exports. we found that the value of exports from about a quarter of them has fallen by more than 75 per cent since the year 2000. had the exports of these products instead risen in line with foreign demand, they would have contributed about $ 30 billion in additional exports last year. by correlating these findings with media reports, we found that many were affected by factory closures or other restructurings. obviously, not all of this can be blamed on the financial crisis and the ensuing downturn, but for companies that were already struggling with competitiveness, the crisis surely accelerated things. the point is, when companies downsize, relocate or close their doors, the effects on the economy are permanent. those specific lost exports will not recover – something else is more likely to take their place, but that requires that surviving companies expand, or new exporting companies be created. and both such processes are bound to be much slower than in the typical recession / recovery scenario. a destructive downturn also creates long - lasting effects in our labour market, since the associated jobs are lost permanently. we have recovered well from the employment losses during the downturn, but our labour market has not yet returned fully to normal. indeed, labour conditions in canada point to material slack in the economy. we have been creating jobs at a trend rate of less than 1 per cent, well below what one would expect from an economy that is recovering. furthermore, much of the recent employment growth has been part time. there are over 900, 000 people

the crisis not occurred. still, memories of that near - disaster are fading, and today people are wondering why our policies have so far failed to foster a true global recovery, one that is natural and selfsustaining. the g - 20 has acknowledged this disappointing growth outlook, and has set out a plan to collectively boost global gdp by 2 per cent over the next five years. success will hinge on such policy actions as reforms to improve the functioning of labour markets, international trade liberalization and investment in infrastructure – your favourite area – just to name a few. these things are clearly worth doing, and that boost to global gdp will be worth having. bis central bankers ’ speeches what we don ’ t know even so, when we see a world economy that is growing this slowly, despite the fact that interest rates are at historic lows, it is natural to ask some pretty basic questions. so, let ’ s turn now to what we don ’ t know. let me focus on three questions that people have been asking me of late. first, what is preventing a full - fledged global economic recovery? second, will there be any permanent damage to the economy due to the crisis and its aftermath? and third, by trying so hard to improve our situation, are policymakers simply sowing the seeds of the next financial crisis? what is preventing a full - fledged economic recovery? if interest rates are at zero or nearly zero, it follows that something is holding the economy back. think of paddling a kayak against a strong headwind – it can take a lot of effort just to hold your position, let alone make real progress. it is widely agreed that the conditions that led to the financial crisis included taking on excessive leverage. as individuals and financial institutions have attempted to deleverage in the wake of the crisis, economic growth has been held back. it is difficult to say when the deleveraging process will be complete, at least at the global level. to illustrate, in the united states, private sector deleveraging was painful and swift as people cut back on debt and walked away from their over - mortgaged, devalued houses. in europe, in contrast, this process is less well advanced, while in canada, households continue to add to their debt loads. another headwind has come from governments, which responded to the global recession with additional fiscal stimulus. as the situation stabilizes, though, it is natural for governments to aim to bring their fiscal situation