traded goods and services, and that were able to take advantage of freetrade agreements and strong foreign demand, saw their profits increase. and because the depreciating canadian dollar raised the cost of machinery and equipment relative to labour, businesses in expanding sectors of the economy were encouraged to absorb some of the excess labour that had been released by shrinking sectors. the floating exchange rate also helped on the macroeconomic side. the depreciating canadian dollar in the late 1990s helped to encourage foreign demand, as demand from the government sector was being restrained. so you can see how these three factors converged in the 1990s to lay the groundwork for a stronger economy in the future. a sound macroeconomic policy framework, appropriate structural adjustments, and a floating exchange rate, all did their part to help the economy adjust to the changing circumstances of the 1990s. economic adjustments in the future that ’ s a quick look back. now, i ’ d like to talk about some of the longer - term forces we can expect to see at work in the economy in the years ahead and the economic adjustments that will likely be necessary. the first point i would make is that we have an opportunity in the next few years to again register solid productivity gains. this time, the information and communications technology sector is providing the general - purpose technologies that can drive sustained gains in productivity and incomes. of course, the mere presence of technology is not enough to guarantee higher productivity. we also need investment, as well as training and organizational changes and flexibility. in the latter part of the 1990s, canadians had begun to invest in these productivity - enhancing technologies. after a pause at the beginning of this decade, such investments seem to have resumed. these efforts are particularly important, especially in light of the serious demographic challenges we will face over the next few years. that is my second point : our workforce is aging. current projections are that the share of the population that is of working age - those aged 15 to 64 - will begin to decline in about 15 years. we will need to take these population shifts into account, and to remove impediments for older workers who wish to remain in the labour force. the third point i would make is that there are powerful forces in the global economy that bear watching. the significant imbalances that we now see in the world ’ s current - and capital - account flows need to be corrected. emerging markets, particularly in asia, are becoming increasingly powerful players in the global economy. all these

stephen s poloz : release of the monetary policy report opening statement by mr stephen s poloz, governor of the bank of canada, at the press conference following the release of the monetary policy report, ottawa, ontario, 22 october 2014. * * * good morning. carolyn and i are pleased to be here with you today to discuss the october monetary policy report ( mpr ), which the bank published this morning. as i ’ ve said in the past, the policy decision is not a mechanical one, so i ’ d like to provide some colour around the issues we are dealing with. i would also like to highlight some advances in our thinking since the last mpr. our outlook for the global economy continues to show stronger momentum in 2015 and 2016, but the profile has been downgraded since july. the good news for canada is that the u. s. economy is gaining traction, particularly in sectors that are beneficial to canada ’ s exports. and our exports do appear to be responding, with some additional help from a lower canadian dollar. our conversations with exporters indicate that they are seeing a better export outlook from the ground. however, it is clear that our export sector is less robust than in previous cycles. last spring, as you may recall, we identified which non - energy subsectors could be expected to lead the recovery in exports, and which would not. we have since investigated in more detail the subsectors that have been underperforming. after sifting through more than 2, 000 product categories, we have 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 could see that many were affected by factory closures or other restructurings. in other words, capacity in these subsectors has simply disappeared. this analysis helps us understand a significant portion of the gap in export performance. our research also tells us that most of the sectors expected to lead the non - energy export recovery still have some excess capacity. our business outlook survey ( bos ) interviews indicate that while companies plan to invest in new machinery and equipment, few are planning to expand their capacity, at least so far. this helps explain why business investment might be delayed relative to what would be expected in a normal cycle. this