Winter freeze and low Energy Prices: A Canadian Curse

Extreme weather severely dampened Canada's start to 2015 but more importantly the previously resilient Canadian economy will be sharply impacted by the fall in oil prices with a net loss of 0.9pp of GDP in 2015 from both weather and oil.

Lower exports revenue and capital expenditures, fewer highly skilled jobs, and turbulence for housing and public spending in energy-dependent areas are the key negative consequences of the drop in energy prices.

Low energy prices also mean positives: a drop in fuel prices, a recovering chemical sector, a weaker Canadian Dollar, and an export boost to the U.S.

Companies need to keep credit risk under scrutiny. Higher risk in the Machinery/Equipment sector and an increase in insolvencies (+5% in 2015 and +2% in 2016) are expected.