National security and rising inequality are two of the biggest risks today, said Canadian bank leaders at a conference Tuesday.
“Economic war is how I would basically summarize what’s going on in the world right now,” said National Bank chief executive Laurent Ferreira at the RBC CEO Conference in Toronto.
“Geopolitics are at our doorstep. National security is, I think, one of the most important priorities of our country.”
He said the uncertainty is leading to hesitation on investment and a more fragile labour market and consumer sentiment. While he’s encouraged by the direction Ottawa is taking, he said everything needs to move faster.
“If we want to be part of the new world order, we need to speed this up.”
Ferreira came closest of the four CEOs who spoke in the morning to refer to the extraordinary actions of the U.S. in capturing the president of Venezuela early Saturday. He said “the events this weekend” should play into decision making as Canada focuses on nation building, reindustrialization and defence.
The new tone in Canadian government and the focus on getting projects done is welcome, said RBC chief executive Dave McKay.
“Given the geopolitical world that we live in, the impetus, particularly for Canada to get these things done, is really, really strong.”
He cautioned that rising inequality is a key underlying cause of some of the political shifts going on, as the top 20% of earners break further away from the majority.
“That growing differentiation and disparity is really driving the political agenda in both countries,” said McKay.
“That disparity is much greater in the United States and much more severe and is a huge political issue, and will become an increasing political issue.”
For now, consumers are able to make debt payments and are still spending, but part of that is because Canadians have pulled back on buying homes, he said.
Money Canadians would otherwise be devoting to debt servicing on real estate is instead going to goods and services, said McKay.
He said low activity in condo pre-sales and construction does weigh on the economy, but that higher spending elsewhere has helped create jobs and stabilize employment in the country.
The trend, along with a stabilization of tariffs, has helped the economy do better than many had expected.
“Economies are a lot more resilient today than I would have expected myself three months ago,” said BMO chief executive Darryl White.
He said while many clients are adapting well to the trade environment, the bank is advising clients not to rely on a quick resolution as a formal review of the Canada-United States-Mexico Agreement approaches mid-year.
“To think that we’re going to all of a sudden wake up to a new deal in June or July, I think is a is a bad assumption.”