mark carney : summary of the latest monetary policy report opening statement by mr mark carney, governor of the bank of canada, at the press conference following the release of the monetary policy report, ottawa, 18 april 2012. * * * good morning. tiff and i are pleased to be here with you today to discuss the april monetary policy report, which the bank published this morning. the profile for global economic growth has improved since the bank released its january mpr. europe is expected to emerge slowly from recession in the second half of 2012, although the risks around this outlook remain high. the profile for u. s. growth is slightly stronger. this reflects the balance of somewhat improved labour markets, financial conditions and confidence on the one hand, and emerging fiscal consolidation and ongoing household deleveraging on the other. economic activity in emerging - market economies is expected to moderate to a stillrobust pace over the projection horizon, supported by an easing of macroeconomic policies. commodity prices remain elevated owing to improved global economic prospects, supply disruptions and geopolitical risks. in particular, the international price of oil has risen further and is now considerably higher than that received by canadian producers. if sustained, these oil price developments could dampen the improvement in economic momentum. overall, economic momentum in canada is slightly firmer than the bank had expected in january. the external headwinds facing canada have abated somewhat, with the u. s. recovery more resilient and financial conditions more supportive than previously anticipated. as a result, business and household confidence are improving faster than forecast. the bank projects that private domestic demand will account for almost all of canada ’ s economic growth over the projection horizon. household spending is expected to remain high relative to gdp as households add to their debt burden, which remains the biggest domestic risk. business investment is projected to remain robust, reflecting solid balance sheets, very favourable credit conditions, continuing strong terms of trade and heightened competitive pressures. the contribution of government spending to growth is expected to be quite modest over the projection horizon, in line with recent federal and provincial budgets. the recovery in net exports is likely to remain weak in light of modest external demand and ongoing competitiveness challenges, including the persistent strength of the canadian dollar. the bank projects that the economy will grow by 2. 4 per cent in both 2012 and 2013 before moderating to 2. 2 per cent in 2014. the degree of economic slack has been somewhat smaller than anticipated, and the economy is

all be doing to boost productivity. in fact, if i took the time to drill down into every potential priority, this breakfast speech would become a lunch speech, too. so i'm going to focus on three key areas. the first is labour composition, or the skills workers bring to the job. for existing workers, improvement here means having access to training and reskilling programswhether it's learning how to use new workplace technologies or gaining skills that can create opportunities to switch to a whole new job. for new entrants to the workforce, we're counting on colleges, universities and apprenticeship programs to prepare students for current and future jobs. it's also important to acknowledge that canada's workforce is expanding at a recordsetting pace, with immigration driving this increase. in january, the working - age population grew by over 125, 000 people. that's the fastest single month of workforce growth on record. in the future, canada's productivity - and our standard of living - will depend importantly on how well we leverage and develop the skills of these new workers. too often, new canadians are working in jobs that don't take advantage of the skills they already possess. and too often these people wind up stuck in low - wage, lowproductivity jobs. doing better at matching jobs and workers is crucial to the future of canada's economy. the second key area relates to multifactor productivity. we know that small and medium - sized companies tend to lack the economies of scale that allow larger firms to become more productive. and canada has proportionally more of these smaller firms than many other economies do. removing disincentives to growth is always a good idea. but if i had to pick the biggest concern in this area, i'd say it's competition. simply put, businesses become more productive when they're exposed to competition. competition drives companies to become more productive by innovating and by finding ways to be more efficient. in doing so, competition can make the whole economy more productive. canada's economy features many sectors where companies face limited levels of competition, whether from firms in other provinces, foreign rivals or new entrants. of course, every country has certain sectors that it champions, and there can be valid reasons to protect local businesses. however, too much protection can lead to problems. it can also help to explain canada's weak record in business investment. this brings me to the