TOKYO/RIYADH (Reuters) – Bank of Japan Governor Haruhiko Kuroda said he was watching the coronavirus impact on the economy with “grave concern,” in a nod to the growing toll the epidemic is taking on manufacturing activity and exports across Asia.
The fallout from the health crisis will be a main topic of debate at a Group of 20 finance leaders’ meeting in Riyadh, Kuroda said on Friday, in a sign it could overshadow the weekend meeting of the world’s top economies.
Massive business disruptions in China are starting to spillover into the global economy, with parts shortages rippling through supply chains as far away as the United States. Asian economies that are heavily reliant on exports to China and Chinese tourists are being hit hard on both fronts.
“Huge uncertainty remains on how the spread of the new virus may affect the Japanese economy,” Kuroda told parliament.
“We’re watching the impact with grave concern and keeping a close eye on downside risks,” he added.
The epidemic has already extracted a heavy human and economic toll in China, with over 2,200 deaths, prompting authorities to take strict containment measures.
Retail sales of passenger cars in China plunged 92% on an annual basis in the first 16 days of February, according to China Passenger Car Association (CPCA).
Japan’s factory activity contracted at the sharpest pace in seven years in February, a private industry survey showed on Friday, adding to growing signs the world’s third-largest economy is on the brink of recession.
South Korea’s exports to China slumped in the first 20 days of February, indicating a grim outlook for Asia’s fourth-largest economy.
Kuroda reiterated the BOJ’s readiness to ease monetary policy further as needed. But he said it’s “not time yet” to discuss specific monetary policy steps, suggesting the BOJ won’t deploy its dwindling ammunition easily.
Japanese Finance Minister Taro Aso told reporters on Friday he will explain to his G20 counterparts that Tokyo is taking necessary steps to contain the spread of the epidemic, which has become “among risks to the global economy.”
The weak yen, however, may offer Japanese policymakers some relief by boosting the value of profits Japanese manufacturers earn overseas, some analysts said.
GLOBAL IMPACT
Japan’s economy shrank at its fastest pace in nearly six years in the December quarter, as soft global demand and last year’s sales tax hike hurt consumption and business spending.
Some analysts expect the economy to contract again in the current quarter, dashing the BOJ’s hope an expected rebound in global growth mid-year will underpin Japan’s fragile recovery.
The damage from the outbreak is spreading across Asia with organizers cancelling events, flight cancellations hurting tourism and fears of the virus keeping shoppers home.
Analysts are divided on how much the epidemic could hurt the global economy. Oxford Economics say its baseline scenario is for the outbreak to have a large but short lasting impact centered on China and the rest of Asia.
“We assume the economic effects are concentrated in the first half of 2020 and that the outbreak then starts to come under control,” Oxford economists said in a research note.
Even so, the outbreak will cut global economic growth to just 2.3% in 2020, its weakest since 2009, they said.
In a note for the G20 finance leaders, the International Monetary Fund said a further spread of the epidemic could derail a “highly fragile” projected recovery in the global economy in 2020.
Highlighting increased global interdependencies, Amazon sent an urgent email to suppliers this week about its midsummer mega sale Prime Day indicating it has begun worrying about inventory, the New York Times reported on Thursday.
(Reporting by Tetsushi Kajimoto in Tokyo and Leika Kihara in Riyadh; additional reporting by Daniel Leussink and Takaya Yamaguchi in Tokyo, Cynthia Kim and Joori Roh in Seoul, editing by Chang-Ran Kim, Richard Pullin and Kim Coghill)
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.
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.
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.
