TORONTO/CAMBRIDGE, Ontario (Reuters) - Finance Minister Jim Flaherty said on Monday that, while the economic recovery is under way, risks still lurk, including global credit issues and high domestic unemployment.
“There’s still concerns in credit markets around the world. Witness what we’ve just been through with ... fiscal crisis in Greece and the fallout that can come from that kind of sovereign crisis,” he told reporters in Toronto.
“We have to be cautious. We’re on our way to a recovery. There’s still significant unemployment in Canada, above what we’re used to in Canada. That’s a concern. There’s still some concerns on the credit side about the full availability of credit as we had before the crisis.”
He acknowledged that some recent positive economic news and the country’s comparatively strong fundamentals had put upward pressure on the Canadian dollar.
“There’s lots to like about Canada. I think that’s one of the reasons we’ve seen some upward pressure on the Canadian dollar. The flip side of that of course is the weakness of the U.S. dollar,” he told reporters later in Cambridge, a 90-minute drive west of Toronto.
He was a keynote speaker at a conference held by a think tank ahead of this year’s G8 and G20 summits hosted by Canada.
Flaherty, the longest serving finance minister in the Group of Seven nations, said there were also some concerns about assets held by non-Canadian banks. But he said Canadian financial institutions had a “very limited” exposure to Greece.
Asked about Canadian jobs data for April due out this Friday, Flaherty declined to comment. But he noted that employment growth tends to lag in the early stages of a recovery.
“I do expect that, over time, we’ll continue to see some drag on the job numbers, that they will not be as good as the economy overall might indicate. This is not unexpected,” he said.
Flaherty also said he hopes that European countries outside of Greece take steps to control their budget deficits to maintain market confidence.
“I‘m worried about any countries that are in a situation where they do not appear to be fiscally responsible and they do not engender the confidence of the markets,” he added.
With additional writing by Jeffrey Hodgson; editing by Peter Galloway