The Governor of the Bank of Canada believes the Northwest Territories is “one important decision” away from reversing its gloomy economic outlook.

Speaking at a Yellowknife Chamber of Commerce event on Tuesday, Stephen S Poloz characterized current pessimism about the territory’s economic future as a product of any mining economy.

Poloz also pointed to tourism as the “best growth business” for the territory’s immediate future – promising he himself, on his first visit to Yellowknife, would return as a tourist.

When told he should have visited in just about any month other than May, when the northern lights are barely visible and the summer season has not begun, he grimaced: “I understand that.”

Poloz told Cabin Radio: “I’m going to set my alarm again tonight because last night I didn’t see any [aurora], but I’m going to try again tonight, so why don’t you keep your fingers crossed for me?”

‘I’ve really liked it’

Late last month, economic think tank the Conference Board of Canada released a report suggesting even the expected opening of two new metal mines will not make up for the NWT’s decline in diamond production.

“For now, the best years for the Northwest Territories are behind it,” the report claimed.

However, Poloz countered: “People who you ask are a little bit on the pessimistic side just now, primarily because of the outlook for the mining sector. It’s not a surprise, it’s a very cyclical kind of sector and relies on big, once-in-a-while decisions around investments.

“When you go through a dry period, people are bound to get pessimistic. It takes one important decision to happen and people turn that attitude around.”

He added: “The best growth business is the tourism business. This is my first visit, I’ve really liked it, so I know that I’ll be back as a tourist. It doesn’t get as much hard analysis as the mining sector does but it deserves it – folks come, spend money, enjoy themselves, then their friends come.”

Earlier, addressing around a hundred people at Yellowknife’s Explorer Hotel, Poloz said a cyber attack on Canadian financial institutions would be his worst nightmare.

“What really keeps me awake at night is a cyber event, that’s such a big unknown,” he said during a Q&A session.

“We believe we’re well-prepared, we believe the system’s well-prepared – then you wake up, read something has happened and, you know, they were well prepared.

“We’re investing a great deal into resilience, redundancy, and preparedness for the day after, so Canadians can continue to count on the financial system doing its job. That’s taking a lot of our attention.”

Household debt

Poloz’s prepared speech to the chamber of commerce focused on the effect of rising household debt on Canada’s economy.

Poloz said higher interest rates “may be warranted over time” but, with high household debt expected to persist for years, the economy is – in his view – more sensitive to interest rate changes than in the past.

“We will continue to watch how households and the entire economy are reacting to higher interest rates,” said Poloz. “And we will be cautious in making future adjustments to monetary policy, guided by incoming data.”

Overall, Canadian households are in debt to the tune of roughly $2 trillion, a figure that has risen for three decades. The average Canadian owes about $1.70 for every $1 they earn in income after tax each year.

The Canadian dollar briefly rallied on the back of Poloz’s speech, before slipping again.