Canada vulnerable to eurozone turmoil

A new study shows that Canada's economy could be shaken by potential credit shocks across the Atlantic.

Lately, there have been signs pointing to improvements in the eurozone. But considerable risk remains - and Canada could be negatively affected, says Pierre L. Siklos, professor at Wilfrid Laurier University's School of Business and Economics.

In a new study released by the C.D. Howe Institute in early March, Siklos says that if there were to be a credit-related shock on the scale of the Greek experience, "Canada's economy would suffer a substantial drop of almost 8% in real GDP after two and a half years."

Most studies look into the US-Canada relationship. This one breaks new ground by focusing on links between Canada and the eurozone, which will grow in importance as the Canada-EU trade agreement unfolds.