In Vancouver, when similar measures were introduced last year, we saw the market cool for a period of time. But it is picking up again. So, given we expect household spending to slow somewhat, it could surprise us and provide an unexpected boost to growth in the near term, which is another risk we mentioned in April.
Higherthan-expected spending, if funded by credit, could add to the vulnerabilities in the household sector. We have been monitoring these for some time and highlighted them in last week’s Financial System Review. In this regard, the recent policy measures taken by federal and provincial governments are welcome. If there was one disappointment in the first-quarter figures, it was exports.