Wealth management executive Peter Letko says he sees reasons to be optimistic about the Canadian economic landscape, despite signs of a downturn on the horizon.
Letko, co-founder of Letko Brosseau Global Investment Management, discussed his positive outlook for Canada’s economy with BNN Bloomberg on Thursday, citing the country’s “excellent” infrastructure and its growing, well-educated population.
“Canada is a place that has what people need and want,” he said in a television interview.
“I think we added something like a million people to a 40 million base last year, it’s extraordinary. I can’t help but be very optimistic about how Canada is moving along.”
NOMINAL GDP ‘CHUGGING ALONG’
Despite high inflation and cost of living in Canada, nominal GDP growth has remained strong, which Letko argued points to a healthy economy at its core.
While economists have been focused on calculating real growth, which has largely been stagnant this year, nominal growth has been “chugging along,” he said.
“When we speak of nominal growth, that’s what flows through Walmart’s cash registers, and we’ve been through a period that has continued to show very nice growth,” Letko said.
“It’s clearly slowing, and as things slow, there may be a risk of slipping into recession, but by and large, we’ve had a wonderful economy, and the stock market’s been helping us along.”
INVESTING IN CANADIAN NAMES
Letko urged other investors to share in his optimism about Canadian companies, adding that he’s “disappointed” with Canada’s pension industry showing an increased desire to invest outside of the country.
“It’s a pool of capital that’s ideally suited to make investments in equities, and so much of that is being done outside of Canada,” he said.
Letko said the industry has gone from investing nearly 30 per cent in Canadian stocks in the year 2000 to just three per cent at the end of last year.
He made the case that Canadian companies represent the best of what the country has to offer, and said that Canada’s banks and insurance companies are held in high regard globally, offering high return on investment.
“There’s nothing of that in some of these pension portfolios,” Letko said. “I don’t quite understand what the logic is there.”
