Canada's stimulus program has added only 1% to growth that would have taken place without any injection of public spending.
Ottawa (16 Aug. 2010) - It's not just the progressive left and people on the fringe who think the economy needs more stimulus to catch fire.
Now the Bank of Montreal (BMO), one of Canada's big-five chartered banks, is calling for public spending too, saying that the global economy is too fragile for governments to retreat to deficit-tightening agendas, as the Harper government is planning to do in Ottawa.
BMO says in a new report that most industrialized nations should continue pumping money into the recovery, especially in the United States, where signs of further slowdown are everywhere. Even Canada, which is in better shape, has no room for complacency and should not be so adamant about ending its stimulus programs, the bank says.
Deputy chief economist Douglas Porter says the problem with stimulus so far is not that it hasn't worked but that it hasn't been tried as seriously as it should be.
That's especially true in the U.S., where the money Washington has tried to pump into the economy federally has been undercut by belt-tightening at the state level.
In Canada, Porter says the federal stimulus has added only about 1% to the gross domestic product (GDP) from the level that would normally have been expected.
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