Economy

The world desperately needs a fairer economy – here’s how we can make that happen

Published

2 years ago

April 14, 2023

The Covid-19 pandemic derailed economies everywhere, and in most developing countries incomes remain well below pre-pandemic levels. Inflation, made worse by the war in Ukraine, is particularly painful for low-income and vulnerable countries, where essentials like food and energy dominate household budgets. Higher interest rates are exacerbating debt distress across much of the developing world, squeezing public and private investment and paring back growth. To compound this, the climate crisis is hitting the very countries that contribute least to the problem, and which have the most limited means to cope.

Already, we are seeing the reversal of hard-won development gains. The World Bank estimates that the pandemic and the war in Ukraine have pushed up to 95 million more people into extreme poverty. The World Food Programme projects that almost 350 million people may be food insecure in 2023, more than double the number in 2020. In the wake of the pandemic, unemployment is higher, gender gaps are wider and the share of young people with neither jobs nor sufficient education has risen, according to the International Labour Organization.

None of this is inevitable. If we take the global implementation of the United Nations sustainable development agenda as a barometer of progress, it is true we are on the verge of failing – particularly for countries with inherent vulnerabilities. But governments, the private sector and civil society can make the decisions today that lay a foundation for sustainable development for generations to come. The World Bank and IMF meetings under way in Washington DC this week provide an opportunity to bring these important issues to the table.

International trade has a critical role to play in creating the better jobs, value addition and greater resilience that countries are seeking. We know that over the past 40 years, global economic integration has helped lift more than 1 billion people out of poverty. But even before the pandemic, it had become clear that many people in poor countries had not received a fair share of the gains from globalisation. Neither have many poor people in richer countries.

The weaknesses exposed in global supply chains by the war in Ukraine and the pandemic should be treated as an opportunity to reimagine globalisation, and assist countries and communities left behind during recent decades to use trade as a means to meet their sustainable development aspirations.

At the crux of this reimagined globalisation is the need to bring many more countries into what would become deeper, de-concentrated networks for producing, which would help provide marginalised countries and communities with access to new and existing value chains for both goods and services.

Companies have already been moving to add suppliers in places such as south-east Asia, India and Mexico, rather than just maintain a presence in one market, whether to save on costs or to manage risks. Fast-growing demand for services delivered over the internet is creating opportunities around the world. Extending these realignments to encompass smaller and more vulnerable countries would enable them to use international markets, ideas and capital to create better, more productive jobs.

In addition, drawing more small- and women-owned businesses into these production networks would deliver manifold socioeconomic benefits. Beyond the gains of development and inclusion, more diversified supply chains would also be more resilient to shocks, like extreme weather events or disease outbreaks.

Open and predictable markets are a prerequisite for this re-globalisation process. But they are not sufficient. Access to finance on prolonged and low-cost terms is an indispensable part of building a more sustainable, more inclusive global economy. The Bridgetown Initiative put forward by the government of Barbados calls for a reassessment of the current global financial architecture to drive multilateral and private sector financial resources towards climate mitigation and resilience. Following through on this initiative could play an important role in addressing the climate finance needs of developing countries and indeed the financing of the sustainable development goals.

A strong and effective trading system would amplify the impact of necessary action on debt reform and green investment: exports earn foreign exchange, and access to larger markets increases potential returns on investment.

Equally, the development of a just industrial strategy is critically important as countries work to reach net zero. Promoting innovation and working with developing and least-developed countries to access new technologies and ideas are necessary parts of the equation. This, together with broadly open export markets, increased direct investment and greater access to affordable capital will improve chances for the global south to produce and buy the goods needed to transition to a green economy.

Every part of this agenda is a tall order, all the more so at a time of rising geopolitical tensions. But as governments demonstrated by striking several multilateral agreements at the WTO ministerial conference last June, cooperation on trade is still possible. These efforts must continue so that the multilateral trading system helps all economies seize the opportunities available to them, and cope with the vulnerabilities and challenges. Working together, we can use trade to build a fairer, more just and more resilient economic future.

Mia Amor Mottley, SC, MP is prime minister of Barbados. Dr Ngozi Okonjo-Iweala is director-general of the World Trade Organization

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Economy

Canada’s unemployment rate holds steady at 6.5% in October, economy adds 15,000 jobs

Published

1 day ago

November 8, 2024

Anne Joseph

OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.

Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.

Business, building and support services saw the largest gain in employment.

Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.

Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.

Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.

Friday’s report also shed some light on the financial health of households.

According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.

That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.

People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.

That compares with just under a quarter of those living in an owned home by a household member.

Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.

That compares with about three in 10 more established immigrants and one in four of people born in Canada.

This report by The Canadian Press was first published Nov. 8, 2024.

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Economy

Health-care spending expected to outpace economy and reach $372 billion in 2024: CIHI

Published

3 days ago

November 6, 2024

Anne Joseph

The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.

The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.

CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.

This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.

While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.

Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.

The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.

This report by The Canadian Press was first published Nov. 7, 2024.

Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.

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Economy

Trump’s victory sparks concerns over ripple effect on Canadian economy

Published

3 days ago

November 6, 2024

Anne Joseph

As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.

Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.

A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.

More than 77 per cent of Canadian exports go to the U.S.

Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.

“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.

“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”

American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.

It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.

“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.

“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”

A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.

Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.

“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.

Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.

With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”

“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.

“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”

This report by The Canadian Press was first published Nov. 6, 2024.

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