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BC continues progress on economic recovery in second quarter | BC Gov News – BC Gov News

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Targeted supports for people and businesses, increased vaccinations and the resilience of people and communities continue to drive a strong economic rebound in B.C. with second quarterly results showing a further reduction in the provincial deficit.

Based on data until the end of September, B.C.’s deficit is projected at $1.7 billion – a substantial reduction from the $9.7-billion deficit originally estimated at Budget 2021, and the $4.8-billion deficit predicted in the First Quarterly Report.

As previously reflected in the first quarter, the reduced deficit is primarily attributed to higher-than-expected revenue from personal and corporate income taxes, increased activity in the retail and housing sectors, strong resource revenues and commercial Crown net income, while expenses remained stable.

“By putting people first, while being nimble and responsive to the challenges the pandemic has introduced, we’re continuing to see positive effects in our financial outlook and our economy,” said Selina Robinson, Minister of Finance. “That approach has helped to support people and businesses through the challenges we have seen so far, while putting us in a good place to be able to continue to provide the supports needed by those affected by the recent disaster.”

There continues to be significant uncertainty about the rest of the year, especially considering still-to-be-determined impacts of flooding and extreme weather events and the ongoing COVID-19 pandemic as many areas of the world continue to experience outbreaks. Higher inflation, increased strain on supply chains and other associated pandemic impacts, which could be worsened by the recent flooding, will also continue to affect economic recovery.

“The future remains uncertain, and we will continue to do what is needed to support people through the challenges we face as a province, whether that is the continued effects of a global pandemic or the response and recovery from the recent extreme weather,” Robinson said. “As we move through the immediate response and look at our next steps, our focus remains on building resilience, not only in our budgets but also in our communities, services and economy now and for B.C.’s future.”

Although private-sector forecasters have lowered real gross domestic product (GDP) projections for all Canadian provinces since August, B.C. is still expected to be among the leaders for economic growth for 2021 and 2022. The province also saw a smaller decline in GDP in 2020 than other major provinces more deeply affected by the pandemic.

The Labour Force Survey for October solidifies B.C.’s position as leading Canada’s economic recovery with another 10,400 jobs added around the province that month, while consumer spending and exports remain strong. High vaccination rates and vaccinations for children five to 11 also signal optimism for B.C.’s future.

In the coming weeks, and as part of the budget process, B.C. will meet with members of the Economic Forecast Council and an ESG Advisory Council to discuss current events and issues affecting the province’s economy and forecasts. B.C. will next report with Budget 2022 on Feb. 22, 2022, which will include more details on the path and timeline to return to balance.

Quick Facts:

  • The Second Quarterly Report provides a general view of the Province’s financials up to the end of September 2021 and does not factor in the effects of recent events, including flooding, infrastructure damage and emergency response.
  • The second quarter outlook for 2021-22 forecasts a deficit of $1.7 billion.
  • Revenues have risen to $68.2 billion and expenses have remained stable at $68.9 billion for the 2021-22 fiscal year.
  • Pandemic and recovery contingencies are $3.25 billion, while the forecast allowance is unchanged at $1 billion.
  • For 2021-22, the taxpayer-supported debt-to-GDP ratio is projected to improve to 18.2%, and the taxpayer-supported debt-to-revenue ratio is forecast to improve to 95.0%.

Learn More:

To read B.C.’s Second Quarterly Report, visit: https://www2.gov.bc.ca/gov/content/governments/finances/reports/quarterly-reports

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How will the coronavirus omicron variant affect the economy? – Marketplace.org

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Scientists are racing to figure out omicron, the new coronavirus “variant of concern,” and governments are scrambling to devise strategies for dealing with it. Several have rushed to enact new travel bans and dust off mask requirements.

On Friday, the United States announced that it would ban visitors from South Africa and seven other countries in the region. And on Monday, President Joe Biden said he expects no additional travel bans and doesn’t think new shutdowns are necessary.

So what might omicron have in store for the U.S. economy?

We don’t need more lockdowns for the virus to damage the economy. It can do that via plain old fear. Gad Levanon, who heads the labor market institute at The Conference Board, said that if omicron turns out to be, say, a slightly worse delta, we might expect a similar economic result.

“Spending on leisure and hospitality would be impacted, spending by older people and families with young children that are not vaccinated — they will be spending less — and especially, I think, tourism will take a big hit,” he said.

The U.S. has ended up trying to manage the virus rather than stamp it out, but some other countries — countries with whom the U.S. trades — are inclined to take a stricter approach.

“China is still persisting with its zero-COVID policy, so if we saw more disruption and closures of factories, that would weigh on supply chain problems that have already been an issue,” said Paul Ashworth, chief U.S. economist at Capital Economics.

How omicron might affect inflation is another question that, for now, is unclear.

“In the near term, you’re going to have a sharp, sudden reduction in consumer demand,” said Ian Bremmer, president of Eurasia Group.

That would bring inflation down. But if omicron turns out to be particularly serious, supply chain problems might intensify in a month’s time, keeping prices up. “The effect is mixed but differs over time,” Bremmer said.

We don’t know yet what threat omicron poses to global health, but we do know that the virus controls the economy, and the information we get over the next few weeks will dictate the path our economy takes.

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How Much of a Threat Is the Omicron Variant to the Economy? – The New Yorker

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How Much of a Threat Is the Omicron Variant to the Economy?

President Joe Biden stands at a podium wearing a black suit and blue tie. There are holiday decorations and a painting...

Biden urged Americans to get fully vaccinated and wear masks indoors, adding, “The variant is a cause for concern, not a cause for panic.”Photograph by Anna Moneymaker / Getty

What a difference a few days makes. This time last week, retail analysts were looking forward to a bumper holiday-shopping season, the stock market was making new highs seemingly by the day, and economists were predicting that annualized G.D.P. growth could top eight per cent in the final quarter of the year. The Delta-variant surge in COVID-19 cases, which had been rapid during the summer, seemed to be behind us. Speaking at a White House event where President Joe Biden announced that he was nominating Jerome Powell for a second term as the chairman of the Federal Reserve, Powell said, “Today, the economy is expanding at its fastest pace in many years, carrying the promise of a return to maximum employment.”

Then came the news of the Omicron variant, which prompted the worst Black Friday sell-off on Wall Street since 1931 and a distinct change in tone from Powell. “The recent rise in COVID-19 cases and the emergence of the Omicron variant pose downside risks to employment and economic activity and increased uncertainty for inflation,” he said, in prepared congressional testimony that the Fed posted on its Web site on Monday afternoon. “Greater concerns about the virus could reduce people’s willingness to work in person, which would slow progress in the labor market and intensify supply-chain disruptions.”

Before the release of Powell’s testimony, the financial markets had rebounded somewhat from Friday’s drop. The Dow rose by more than two hundred points, and the S. & P. 500 also closed up. The price of U.S. Treasury bonds, which are widely regarded as a haven during times of market stress, fell back after posting big gains before the weekend. Crude oil, which on Friday plunged by about ten dollars a barrel, owing to worries of a slowing global economy, rose by about three dollars.

For once, the market reaction was reasonably rational. The discovery of a new variant, possibly a more contagious one, and the immediate imposition by many governments of new travel restrictions, created a lot of uncertainty about the global economy. Because investors had been pricing in a “new normal” in which COVID-19 didn’t go away but did become manageable, a wave of precautionary selling and profit-taking was inevitable. Similarly, given how little we really know about Omicron, Monday’s pause to assess things also made sense. There were reports from South Africa that some of the new cases are mild ones, but scientists warned that it’s too early to reach any judgment about the lethality of the new variant. Anthony Fauci, the President’s chief medical adviser, informed him at a meeting of the White House COVID-19 response team that it would take about two weeks to “have more definitive information on the transmissibility, severity, and other characteristics of the variant.” Afterward, Biden urged Americans to get fully vaccinated and wear masks indoors, but he said that further lockdowns were “off the table” for now. “The variant is a cause for concern, not a cause for panic,” he added.

At this stage, that judgment applies to the economy as well as the public-health situation. In a circular to clients over the weekend, economists at Goldman Sachs outlined four ways in which this new variant could play out: a “false alarm” scenario, in which Omicron actually spreads less quickly than Delta and has little economic impact; a “downside” scenario, in which Omicron spreads more rapidly than Delta but isn’t significantly deadlier, and has only a modest economic impact; a “severe downside” scenario, in which Omicron turns out to be more contagious and deadly than Delta, prompting another wave of lockdowns and a significant economic downturn; and an “upside” scenario, in which Omicron spreads faster than Delta but proves much less deadly. In this upbeat outcome, a “net reduction in disease burden leaves global growth higher than in our baseline . . . the recovery in goods and labor supply accelerate.”

Even if that final scenario smacks of wishful thinking, it is true that the range of possible outcomes is broad. It is also important to note that the situation is very different from the start of the pandemic, when the original strain of the coronavirus had free rein. For an extremely bad economic outcome to materialize, there would have to be another wave of widespread and lengthy lockdowns—either compulsory ones imposed by governments or voluntary ones caused by people retreating to their homes out of fear. Such a set of events is conceivable, but it would likely have to be preceded by a big wave of hospitalizations and deaths in areas where Omicron is circulating, not merely more cases. As long as the vaccines continue to offer protection against the most serious illnesses, countries with high rates of vaccination will hopefully be able to escape such a tragedy. (As experts have long argued, to protect the residents of developing countries, which generally have lower rates of vaccination, it is imperative to make vaccines more widely available.)

For now, the Biden Administration and other governments are extremely reluctant to impose more lockdowns, which would be politically controversial and economically damaging. Their medical advisers are busy pointing out that the vaccines have provided significant protection against the previous variants. There is “reason to be optimistic,” Francis Collins, the director of the National Institutes of Health, told MSNBC on Monday. However, the World Health Organization released a technical note that described Omicron as “a highly divergent variant,” and it said that the over-all global risk from Omicron is “very high.”

Powell’s warning about downside economic risks means that an appearance he’ll make before the Senate Banking Committee on Tuesday will be closely watched. It comes as the Fed is set to decide whether to tighten monetary policy more rapidly to head off higher inflation. The emergence of Omicron further complicates this decision, because, as Powell indicated in his prepared testimony, it could affect the economy in several different ways. If a severe fourth wave does materialize, hiring could appreciably slow again, but short-term inflationary pressures could also conceivably increase as disruptions to the supply chain intensify. The year-end meeting of the Fed will be held in a couple weeks. Between now and then, Powell and his colleagues will be watching the news anxiously. Just like the rest of us.


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Bank of Canada to work with Indigenous groups on reconciliation

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The Bank of Canada will work with Indigenous groups to understand the wounds caused by decades of discrimination and determine how reconciliation can create a more inclusive and prosperous economy for all, Governor Tiff Macklem said on Monday.

Macklem, opening a symposium on Indigenous economies, said Canadians could work to correct some of the consequences of those “ugly periods.”

Ottawa forcibly removed thousands of Indigenous children from their communities and put them in residential schools in an effort to strip them of their language and culture, a practice that continues to scar families and individuals.

“The Bank of Canada will be working with a broad spectrum of Indigenous groups to set out what reconciliation means for what we do,” Macklem said.

“Together, we’ll define what reconciliation means for the work of the Bank of Canada — toward a more inclusive and prosperous economy for everyone,” he said.

Canada‘s Truth and Reconciliation Commission called the residential school system “cultural genocide” in 2015, as it set out 94 “calls to action” to try to restore Canada‘s relationship with its Indigenous people, including economic reconciliation.

“We can’t go back and change what’s happened. But we can try to correct some of the consequences,” said Macklem, adding that it is the central bank’s job to create conditions for opportunity for all Canadians.

“Taking concrete steps toward economic reconciliation is our responsibility too. And it’s incumbent upon us to take the time to do this well,” said Macklem.

 

(Reporting by Julie Gordon in Ottawa; Editing by Dan Grebler)

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