Economy

Global Economy Is ‘Perilously Close’ To Recession In 2023, World Bank Warns

Published

2 years ago

January 11, 2023

Topline

The global economy could face a recession and one of the weakest paces of growth on record in 2023, according to annual projections released Tuesday by the World Bank Group, following a year of accelerated inflation, worsening financial conditions and Russia’s invasion of Ukraine.

Key Facts

The World Bank, a U.S.-based organization that provides loans and grants to various countries pursuing capital projects, warned the global economy is “perilously close to falling into recession” in its annual Global Economic Prospects report Tuesday.

Forecasts for global growth in 2023 were cut nearly in half, dropping from 3% to 1.7%—the third-weakest pace of growth ever projected by the organization, behind paces recorded during the 2009 and 2020 recessions.

The U.S. is projected to experience 0.5% growth in real GDP in 2023, compared to no growth for the European Union and 2.7% for emerging markets and developing economies (EMDEs)—which includes countries like India (6.6%) and Russia (-3.3%)— excluding China (4.3%).

The organizations said growth projections were cut because inflation rates have “triggered unexpectedly rapid” policies, resulting in worsening financial conditions, while economic “shockwaves” and an energy crisis continue because of Russia’s unprovoked invasion of Ukraine, the organization said.

World Bank President David Malpass suggested investing in creating new jobs, improved cross-border trade and increased energy access could alleviate the issues facing the global economy, adding “there are significant reforms that could be undertaken now” to curve away from a recession.

Big Number

$1 trillion. That’s how much Europe spent on rising energy costs in 2022 because of Russia’s invasion of Ukraine, according to Bloomberg.

Surprising Fact

Despite the World Bank’s projections, Goldman Sachs, noting “inflation has moved past the peak,” projected a growth of 0.6% for the EU in a release Tuesday, though it maintained its projection of a “pronounced” recession in the United Kingdom.

Key Background

Accelerated inflation rates in 2022 required banks around the world to reverse pandemic-era policy measures, resulting in an “incomplete recovery” by global economies, the World Bank said. The organization’s report is a full percentage point lower than projections released in October by the International Monetary Fund, which continued to downgrade its forecast for the global economy in the organization’s biannual report because of worsening inflation and disruptions spurred by the war in Ukraine. “The crisis facing development is intensifying,” Malpass said of the projections, adding “though the world is now in a very tight spot, there should be no room for defeatism.” Federal Reserve Chair Jerome Powell and other reserve officials have noted the U.S. labor market, which posted stronger-than-expected numbers last month, is evidence the U.S. economy can continue to withstand additional rate hikes. Despite this, however, layoffs continue at several large U.S. companies, after nearly 125,000 were laid off in 2020.

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Economy

Federal money and sales taxes help pump up New Brunswick budget surplus

Published

16 hours ago

September 16, 2024

Anne Joseph

FREDERICTON – New Brunswick‘s finance minister says the province recorded a surplus of $500.8 million for the fiscal year that ended in March.

Ernie Steeves says the amount — more than 10 times higher than the province’s original $40.3-million budget projection for the 2023-24 fiscal year — was largely the result of a strong economy and population growth.

The report of a big surplus comes as the province prepares for an election campaign, which will officially start on Thursday and end with a vote on Oct. 21.

Steeves says growth of the surplus was fed by revenue from the Harmonized Sales Tax and federal money, especially for health-care funding.

Progressive Conservative Premier Blaine Higgs has promised to reduce the HST by two percentage points to 13 per cent if the party is elected to govern next month.

Meanwhile, the province’s net debt, according to the audited consolidated financial statements, has dropped from $12.3 billion in 2022-23 to $11.8 billion in the most recent fiscal year.

Liberal critic René Legacy says having a stronger balance sheet does not eliminate issues in health care, housing and education.

This report by The Canadian Press was first published Sept. 16, 2024.

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Economy

Liberals announce expansion to mortgage eligibility, draft rights for renters, buyers

Published

20 hours ago

September 16, 2024

Anne Joseph

OTTAWA – Finance Minister Chrystia Freeland says the government is making some changes to mortgage rules to help more Canadians to purchase their first home.

She says the changes will come into force in December and better reflect the housing market.

The price cap for insured mortgages will be boosted for the first time since 2012, moving to $1.5 million from $1 million, to allow more people to qualify for a mortgage with less than a 20 per cent down payment.

The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.

On Aug. 1 eligibility for the 30-year amortization was changed to include first-time buyers purchasing a newly-built home.

Justice Minister Arif Virani is also releasing drafts for a bill of rights for renters as well as one for homebuyers, both of which the government promised five months ago.

Virani says the government intends to work with provinces to prevent practices like renovictions, where landowners evict tenants and make minimal renovations and then seek higher rents.

The government touts today’s announced measures as the “boldest mortgage reforms in decades,” and it comes after a year of criticism over high housing costs.

The Liberals have been slumping in the polls for months, including among younger adults who say not being able to afford a house is one of their key concerns.

This report by The Canadian Press was first published Sept. 16, 2024.

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Economy

Statistics Canada says manufacturing sales up 1.4% in July at $71B

Published

20 hours ago

September 16, 2024

Anne Joseph

OTTAWA – Statistics Canada says manufacturing sales rose 1.4 per cent to $71 billion in July, helped by higher sales in the petroleum and coal and chemical product subsectors.

The increase followed a 1.7 per cent decrease in June.

The agency says sales in the petroleum and coal product subsector gained 6.7 per cent to total $8.6 billion in July as most refineries sold more, helped by higher prices and demand.

Chemical product sales rose 5.3 per cent to $5.6 billion in July, boosted by increased sales of pharmaceutical and medicine products.

Sales of wood products fell 4.8 per cent for the month to $2.9 billion, the lowest level since May 2023.

In constant dollar terms, overall manufacturing sales rose 0.9 per cent in July.

This report by The Canadian Press was first published Sept. 16, 2024.

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