What does the Year of the Rat hold for Canada? Sherman Tai, a well-known local fortuneteller and feng shui consultant, makes his predictions on the economy, politics, and people.

Because Canada’s economy is intimately related to America’s, the U.S. downturn will slow our economy. I predicted last year that the Canadian economy would do better than the U.S.’s, and this continues to hold true this year. In 2008, although the American economic recession will negatively affect us, that effect will not be as great compared to previous years. We will not do as well this year, but B.C., Alberta, and Ontario will continue to experience stable economic growth. The first half of the year will be a bit slow, with improvement in the second half.

The gross domestic product is expected to increase by about three percent, with an unemployment-rate decline of approximately six percent. The inflation rate will remain low at approximately 2.2 percent. Interest rates will decline, but the decrease is not expected to be more than half a percentage point. The Canadian dollar will remain strong, at about US$0.95 to US$0.98. Our booming natural-resources industry—particularly natural gas, crude oil, and precious metals—is a contributor to the strong dollar. However, the forestry and paper-products industry will remain weak, especially in the first half of the year. The automobile, machinery, and import-export industries will fare worse than in 2007, and though construction will not be as strong as in previous years, real estate will remain fairly stable.

Calgary and Edmonton will not experience the same level of growth as they did in previous years, but Toronto, Montreal, and Vancouver will remain fairly stable. Those who are looking to buy a home will be disappointed that real-estate values in Vancouver will remain high. Although the market will be a bit slower in the beginning of the year, it will be stronger in the second half of the year, so sellers do not need to fret. The stock market continues to be healthy in Toronto. The stocks that should do well include telecommunications, crude oil, mining, precious metals, and diamonds, with an anticipated five- to 10-percent increase. But investors should beware: the market will be like a roller coaster, so don’t invest unless you can afford the losses.

I predicted in 2005 that the change in government would result in the Conservatives being victorious, but only as a minority government in 2006. With another federal election coming up this year, the Conservatives will again be victorious, but their hopes of becoming a majority government will be slim if
Stephen Harper decides to hold the election prematurely in the spring or summer. However, if the Conservatives wait until after mid-year, their chances of winning a majority government are greater. We will continue to see more foolish political disputes this year, including scandals. On a positive note, there should be tax deductions and some minor improvements in social benefits and health care.

Immigration is a vital part of Canada and its identity. In the past, the wave of Asian immigration was led by Hong Kong and Taiwan and, later on, China. However, with many having returned to their countries of origin, immigration from those parts of Asia has dwindled and left the Chinese market weak, especially in Vancouver. This signifies the end of the Chinese immigration wave. In 2008, immigration to Canada will be predominantly from India, South Korea, and Eastern Europe.

I mentioned in last year’s article that we will see a lot of gun violence, traffic accidents, and union strikes. In the Year of the Pig, we saw a large number of gang-related shootings. We were inconvenienced by a garbage-collection strike that lasted well over 90 days. We saw a small airplane crash into a Richmond high-rise. Luckily, there won’t be any serious natural disasters in the Year of the Rat. However, disturbances related to water, such as landslides from heavy rainfall, will be more frequent.

Unfortunately, social problems continue to cause concern. These include escalating gun violence, car accidents, home invasions, and youth crimes. Care should be taken regarding what is ingested, as there will be a greater incidence of communicable diseases. The weather will be a bit paradoxical and difficult to predict: it won’t be hot when it ought to be, or when it gets cold, it will become really cold. As there will be fewer strikes compared to previous years and therefore fewer disruptions to daily life, at least there is something for Vancouverites to be happy about.

Our American neighbours, however, will not fare as well in the Year of the Rat. Unlucky stars in the western position have been negatively affecting the economy since mid 2007 and will continue to do so this year. In 2008, the economy will continue to be problematic. Retail, exports, and even banking will be affected, in addition to the already-ailing automotive and real-estate industries. Expect to see more downsizing and consolidation, as well as an increasing unemployment rate. Controlling the interest and inflation rates will be a challenge this year, with the interest rate initially decreasing to 1.25 percent, then increasing again in the last half of the year, and the inflation rate increasing about 2.5 percent. The American economy will experience a hard landing or a big correction. Subprime lending is not expected to have a strong negative effect on the economy. Because of the slow economy, crude-oil prices will continue to be in the range of US$89 to US$93 a barrel. Gold prices will continue to increase.

Whether it’s the resource or foreign-exchange markets, there will be large fluctuations as a result of the conflicts in Afghanistan, Pakistan, and Middle Eastern countries, as well as the threat of terrorist activity
domestically. Luckily, there won’t be any terrorist attacks in 2008. That threat, however, is still a burden on the economy, hence the weak dollar and the greater outflow of money from the country. If you are thinking this is an opportune time to invest and take advantage of the economic atmosphere, you should reconsider and wait at least until the fall, when the currency, economy, and financial markets are more stable. For those who have sufficient funds to dabble in stocks, consider investing in crude oil, mining, technology, and pharmaceuticals.

Who will become the next president of the United States? Sorry, President Bush, but it’s time to make way for Hillary Clinton, who has a very good chance of becoming the first female president. Terrorist activity continues to be strong, and the prospects of capturing Osama bin Laden this year are hopeless. Whether it’s finance or politics, there will be many scandals, and CEOs of large companies may be forced to resign or may run into legal problems. Safety will continue to be threatened south of the border, and crime will escalate, especially shootings, thefts, and white-collar crimes. Natural disasters will also threaten safety, especially in the West, where there will be problems related to fire, water, and wind, including large-scale traffic accidents and explosions.

For extensive individual Chinese-zodiac predictions, visit Sherman’s Web site at www.shermantai.com/eng/zodiac.php . He can be reached at 604-278-8381 or sherman@shermantai.com .