MONTREAL - Don't underestimate the resilience of the U.S. entrepreneurial culture and its ability to propel an economic recovery that will benefit Canada's manufacturing sector, the head of the National Bank of Canada said Thursday.
"Essentially, all the products that have changed our lives over the last 10 to 20 years are American," Louis Vachon said, citing Apple, Google and Twitter.
"(So) you can't underestimate the American entrepreneurial culture and I think in the near- and medium-term it will be constructive."
National Bank's (TSX:NA) CEO told the International Finance Club of Montreal that he foresee moderate economic growth in the United States over the next two years.
He said the U.S. banking system has strongly recapitalized and the housing market has stabilized and is improving, which will boost Canada's lumber industry.
"I think the American economy in the second half of 2013 will give a good help to the Quebec and Ontario economies, where most of the manufacturing sector is based."
Vachon said he was not worried about the recent slowdown in the Canadian housing market brought on, in part, by tighter lending rules pushed by the federal government.
Instead, the key to growth is investing to expand manufacturing production, he said.
And while emerging countries are replacing the United States as the engine of global economic growth, he said large development projects that rely on these countries, including Quebec's Plan Nord, should anticipate intense volatility.
"Emerging countries for all kinds of reasons, whether they be social, demographic or other, are more volatile than the United States," he said.
As for Europe, the head of Canada's sixth-largest bank said the Continent is doing much better because of a "tsunami of liquidity" by the European Central Bank that is also hiding some structural weaknesses.
He said the long-term solution for Europe is to select a consistent political model and rewrite its social compact because the ratio of workers to retirees has plummeted by more than half.
Meanwhile, Vachon said the bank has initiated a pilot project to transition its own older employees to retirement because many leave before they may be ready. In fact, about one-third of the 660 employees who have retired over the past four years continue to work.
In the face of a shortage of skilled workers, the bank seeks to retain experienced older workers while they transfer their knowledge to younger workers by lightening their schedules through part-time hours.
About 20 people are currently enrolled in the trial effort, which is slated for expansion.
On the Toronto Stock Exchange, National Bank shares closed down nine cents at $79.29 in Thursday trading.