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Stunned and confused
Legal cannabis is expected to boost the official benchmark of the Canadian economy.
But it is really a lot of smoke. And some mirrors.
The statisticians will not be dazed and confused by it all after marijuana becomes legal next month, but others can be of us when we see that economic growth is considerably stronger than it should be.
This is for example a big reason why Toronto-Dominion Bank economists have increased their forecast for economic growth, even though economic growth will not be much stronger.
They are not dazed and confused too, because they know that it is an accounting illusion & # 39; will suddenly make something legal that was forbidden fruit.
"We have upgraded our economic growth forecast to 2.2 percent by 2019, but we would be cautious to read too much enthusiasm in this," TD economists said in a new projection this week.
"Part of the elevator to next year's growth prospects can be portrayed as an artificial increase in the government's legalization of cannabis," she added.
"On 17 October, consumption of cannabis will become legal, and shortly thereafter Statistics Canada will include both recorded and non-cultivated cannabis activity in the official economic statistics."
TD expects that legalization will drive the production of the real gross domestic product by between $ 7 billion and $ 8 billion, which is largely visible in the last quarter of this year and the first quarter of next year.
"Although it is not a huge sector in an economy of nearly 2 trillion trillion, inclusion as a" levellift "in 2018 Q4 and 2019 Q1 influences measured growth percentages."
So for example what else the economic growth of about 2 percent in the last three months of 2018, according to TD's prediction, would suddenly be 2.9 percent.
It looks like this:
2019 growth lifted 0.2 percent
point by cannabis
Period / peri od% change (quarterly saar)
THE INSIDE AND MAIL, SOURCE: td economics  2019 growth rose by 0.2 percentage point
Period / period% change (quarterly saar)
THE WORLD AND MAIL, SOURCE: td economics
2019 growth lifted 0.2 percentage points by cannabis
Period / period% change (quarterly saar)
THE LIBRARY AND POST, SOURCE: td economics
"Because the technical change comes at the end of the year, this lift flatters the annual growth rates through the higher hand loan he lends to 2019, "TD said.
"It's all a bit of an illusion, however," the bank added.
As TD chief economist Beata Caranci put it later, part of it already existed, but it was not officially measured.
"However, there are some industrial elements that will be & # 39; new & # 39; like activity related to companies on the TSX, ETF & # 39; s that have emerged, some & # 39; new & # 39; retail in bricks, & # 39; said Ms. Caranci, referring to exchange-traded funds.
"But the side of the & # 39; consumption & # 39; was there already. "
Which means you have to shorten certain elements to get the true picture of the economy.
And next year, Ms. Caranci added, Statistics Canada will review its historical data to take into account with the new, legal industry.
"This & # 39; pour back & # 39; of the cannabis economy will remove the growthtomation that will be caught in Q4 2018 this time around the level shift upwards in GDP. "
(You could really impress your friends by pulling TD's declaration on a legally blurred pot party, try this:" Ah-know-mah-lee. ")
" Under the haze, "said TD, you are still looking at an economy of or above capacity, and you will probably see the Bank of Canada raise the benchmark interest rate again at the end of October, depending on how talks to recreate the North American Free Trade Agreement are self-evident.  (Which means if you are one of those Canadians who are famously buried in debt, do not buy pot with a credit card.)
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Markets at a glance
The OECD cuts its forecast for Canada's economic growth next year.
The updated projection released by the Organization for Economic Development and Cooperation today sees the Canadian economy grow in two in 2019, rather than the 2.2 percent predicted it earlier.
The group left its call for growth at 2.1 percent unchanged from 2018.
"Strong US demand continues to support exports, but higher financing costs have begun to boost the growth of households. editions and the housing market essences, and increasing uncertainty in trade policy could dampen business investment, "the OECD added.
Regarding the world economy, the group warned that "the expansion has now reached a peak", with forecasts for growth of 3.7% in each of the year and beyond, or "marginally below pre-crisis norms , with downward risk & # 39; s intensification. "
Key to Canada is, of course, this: "Global trade growth slowed in the first half of 2018, with trade strains already having negative effects on confidence and investment plans.Additional trade restrictions will damage jobs and standards of living, especially for households with low income. "
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