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After worst year on record, Canadian economy enters 2021 with double digit growth – CTV News

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OTTAWA —
The Canadian economy sprinted to the finish line of 2020 with nearly double-digit growth in the fourth quarter, ending its worst year on record on a strong note that has continued into the start of 2021.

The economy grew at an annualized rate of 9.6 per cent over the last three months of 2020, Statistics Canada reported Tuesday, down from an annualized growth rate of 40.6 per cent in the third quarter when the country fully emerged from the near-shutdown last spring.

Despite the better-than-expected result for the quarter as a whole, growth slowed in December with a 0.1 per cent increase for the month, which followed a 0.8 per cent increase in November.

Looking to January, Statistics Canada said its early estimate was for growth in the economy of 0.5 per cent.

“Lots of small businesses — your local barbers, your local restaurant or stores — may have had to shut down through the restrictions, but a lot of other areas did manage to keep grinding through,” said BMO chief economist Douglas Porter.

“The sectors that did get closed down in the second wave, when they’re able to open up, we think the economy will have a big step up, and then we’ll have another, even bigger step up when the vast majority of the population is vaccinated.”

CIBC chief economist Avery Shenfeld wrote in a note that the early January figure should set aside fears of an outright downturn in the first quarter of 2021.

The COVID-19 pandemic was expected to trip up the economy after the virus’s spread shuttered businesses and led to millions out of work. The question was how bad would it be.

The answer the statistics agency provided Tuesday was that real gross domestic product shrank 5.4 per cent, the steepest annual decline since comparable data was first recorded in 1961.

The drop for the year was due to the shutdown of large swaths of the economy in March and April.

Economic activity slowly and steadily grew between May and November, though renewed lockdowns in some areas and a subdued holiday retail season in December saw the final month of the year buck that trend.

Federal spending has also cushioned the blow. Statistics Canada reported on Monday that government aid has more than made up for losses in salaries and wages, particularly for low-income households.

Savings skyrocketed: RBC senior economist Nathan Janzen said households accumulated $212 billion in savings last year, about $184 billion above pre-shock trends, which could give a jolt to the economy as the year rolls on.

“Once containment measures ease, there is a lot of pent-up demand out there for spending on things like travel and hospitality services,” Janzen said.

The different impacts on sectors and the shift in online shopping, among other effects, make GDP an imperfect measure of what the economy went through.

Economist Armine Yalnizyan said an acceleration to digital sales in the retail industry could further disrupt the key economic indicator if technological shifts drive down prices and wages, ultimately affecting tax revenues.

“Even if you’re better off in terms of purchasing power, you may find your quality of life squeezed if we need to raise taxes to offer the same level of services,” said Yalnizyan, a fellow on the future of workers at the Atkinson Foundation.

“That’s why GDP is no longer as robust a measure of progress — because of digital.”

The Liberals have spoken more about employment levels as a key metric of recovery. It’s why experts say Tuesday’s GDP figures likely won’t change federal spending plans the Liberals are set to outline in the coming weeks as part of a budget the government has said would include up to $100 billion in stimulus measures over a three-year period.

“The government has no plan, but they talk about building back better,” said Conservative Leader Erin O’Toole. “And that really means they’re going to be leaving some people in some sectors that they don’t like out of the economic recovery.”

O’Toole didn’t offer specifics of his own, saying the Opposition Conservatives would have a detailed recovery plan before the next federal election.

The Liberals are reviewing a laundry list of budget ideas to help manage through the rest of the pandemic, and aid in a recovery.

Trevin Stratton, chief economist at the Canadian Chamber of Commerce, said support should be targeted in the medium-term to the hardest-hit businesses suffering under a debt load that is fast becoming unsustainable.

Goldy Hyder, president of the Business Council of Canada, wrote in an open letter to Finance Minister Chrystia Freeland that the government should invest in skills training, trade-enhancing infrastructure and research and development to raise productivity.

This report by The Canadian Press was first published March 2, 2021.

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Iran indicts 10 over Ukraine plane crash, prosecutor says; Canada demands justice

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DUBAI (Reuters) – Iran has indicted 10 officials over the shooting-down of a Ukrainian passenger plane in January 2020 that killed all 176 people on board, a military prosecutor said on Tuesday.

In a report published last month, Iran’s civil aviation body blamed the crash on a misaligned radar and an error by an air defence operator. Ukraine and Canada, home to many of those who died, criticised the report as insufficient.

“Indictments have been issued for 10 officials involved in the crash of the Ukrainian plane…and necessary decisions will be taken in court,” Gholam Abbas Torki, the outgoing military prosecutor for Tehran province, was quoted as saying by the semi-official news agency ISNA. He did not elaborate.

In Ottawa, Canadian Prime Minister Justin Trudeau said he was “tremendously concerned about the lack of accountability” from Iran about the disaster.

Canada, along with its partners, will continue to press Tehran to deliver justice and compensation for families of the victims, he told a briefing when asked about the indictments.

Iran’s Revolutionary Guards shot down the Ukraine International Airlines flight on Jan. 8, 2020, shortly after it took off from Tehran Airport.

The Iranian government later said the shooting-down was a “disastrous mistake” by its forces at a time when they were on high alert in a regional confrontation with the United States.

Iran was on edge about possible attacks after it fired missiles at Iraqi bases housing U.S. forces in retaliation for the killing days before of its most powerful military commander, Qassem Soleimani, in a U.S. missile strike at Baghdad airport.

 

(Reporting by Dubai newsroom and David Ljunggren in Ottawa; Editing by Gareth Jones and Mark Heinrich)

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Canadian oil producers CNRL, Cenovus plan new emissions targets, no pivot to renewables

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CNRL

By Rod Nickel and Nia Williams

WINNIPEG, Manitoba (Reuters) -Canadian Natural Resources Ltd (CNRL) and Cenovus Energy Inc, two of Canada‘s biggest oil producers, said on Tuesday they would set new goals to reduce greenhouse gas emissions but not pivot away from their core businesses.

Oil sands producers, which extract some of the world’s most carbon-intense crude, face investor pressure to reduce their environmental impact. Prime Minister Justin Trudeau plans to raise Canada‘s carbon price steeply over time to position the country for carbon-neutral status by 2050.

CNRL’s corporate emissions-cutting goal will be announced in the second quarter, President Tim McKay said at the Scotiabank CAPP Energy Symposium, which is being held remotely.

The company cut carbon intensity per barrel by 18% between 2016 and 2020 and sees carbon capture as a way to further reduce its environmental toll, McKay said.

It does not plan major investments in renewable energy as European oil majors have done.

“The preference is to stick with what we know and what we’re good at,” McKay said. “There’s going to be a need for oil long-term.”

Cenovus is also planning new emissions-cutting targets and might invest in renewable power partnerships.

“Where we’re likely to remain is focused on oil and gas production,” Cenovus Chief Executive Officer Alex Pourbaix told the symposium. “But don’t look for us to become a late-entrant renewable-power developer.”

Suncor Energy Inc is on track to achieve its goal of cutting the emissions intensity of production by 30% versus 2014 levels by 2030, said Chief Financial Officer Alister Cowan, and is now talking about updating its target beyond 2030.

Imperial Oil Ltd could adopt technologies of parent company Exxon Mobil Corp like carbon capture and biofuel blending, Senior Vice President of Finance Dan Lyons said.

“When it comes to wind farms and solar farms, that’s not really in our wheelhouse.”

Sticking to fossil fuels will jeopardize the businesses long-term, said Keith Stewart, senior energy strategist at Greenpeace Canada.

“They will go the way of Blockbuster Video once Netflix arrived,” Stewart said.

Canada‘s transition to a low-carbon economy could displace up to 450,000 oil and gas workers over the next three decades, TD Economics said.

(Reporting by Rod Nickel in Winnipeg and Nia Williams in Calgary; Editing by Marguerita Choy and Peter Cooney)

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Saskatchewan sees bigger, C$2.6-billion deficit to fight pandemic

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By Rod Nickel

WINNIPEG, Manitoba (Reuters) – The Canadian province of Saskatchewan forecast on Tuesday a C$2.6-billion ($2.07 billion)deficit in the current 2021-22 fiscal year, up from last year’s C$1.9 billion, as the pandemic drives up costs.

The province, whose economy relies on farming, oil production and mining, is running a larger deficit so it can effectively respond to the COVID-19 crisis, Finance Minister Donna Harpauer said.

Canadian provincial governments, like the national government, have run bigger deficits since the pandemic began, trying to slow its spread and buttress economies that lockdowns have hit hard.

With government debt rising, credit rating agencies are watching closely for provincial strategies to tame deficits, TD Economics said in a report last month.

Saskatchewan expects to continue running deficits until balancing the books in 2026-27, the provincial government said while introducing its new budget.

The Saskatchewan Party government, led by Premier Scott Moe, forecast spending to increase by 7% to C$17.1 billion from last year, including costs such as vaccinations, tests for infection and purchases of protective equipment.

It forecast provincial revenues for the 2021-22 fiscal year at C$14.5 billion, up nearly 3% from last year.

Saskatchewan’s real gross domestic product looks to grow 3.4% in 2021 after contracting 4.2% last year, the government said.

The budget assumes an average North American oil futures price of $54.33 per barrel during its fiscal year, generating C$505.1 million in royalties.

Neighboring Alberta estimated in February that its 2021-22 budget deficit would shrink to C$18.2 billion, as its economy starts to recover from the coronavirus pandemic.

 

 

(Reporting by Rod Nickel in Winnipeg; Editing by Marguerita Choy)

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