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Both Biden and Trump victories present implications for Canada's economy, shows new report from RSM Canada – Canada NewsWire

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  • Analysis of policies and data from both candidates suggests that a victory for either could pose risks for Canada’s economy
  • Canada’s increasing economic dependence on the U.S. also a large factor in any potential headwinds
  • COVID-19: Canadian economic growth expected to be gradual, with economy projected to contract 5.5 per cent in 2020, followed by a 6 per cent expansion in 2021
  • Consumer sector has been pivotal to Canada’s economic recovery process to date, while labour and manufacturing are still in shock

TORONTO, Oct. 20, 2020 /CNW/ – RSM Canada (“RSM”), the leading global provider of audit, tax and consulting services focused on middle market businesses, today launched its third 2020 issue of “The Real Economy: Canada” – a quarterly report that provides Canadian businesses with economic analysis and insights into factors driving growth, or economic headwinds, in Canada’s middle market.

With the U.S. presidential election taking place in just a matter of weeks, and Canada looking to navigate a second wave of the COVID-19 pandemic, the latest Real Economy: Canada report shines a light on how the election outcome, combined with Canada’s reliance on the U.S. economy, might alter Canada’s  recovery and longer-term outlook.

This report also looks at how Canadian industries have fared since the onset of the pandemic and explores measures the federal government and other authorities can take as the recovery process continues.

Key findings in this quarter’s report include:

  1. Recovery for both Canadian and U.S. economies are closely intertwined
    • Growing dependence on the U.S. due to CUSMA and deteriorating relationship with China has hampered Canada’s ability to chart its own economic course.
    • Data shows total trade between CanadaChina has trended downward since the beginning of the U.S.-China Trade War in 2018. In comparison, total trade between Canada and the United States increased during this period.
    • Current administration’s struggles to cap COVID-19 cases suggest a Trump re-election would present economic risks to Canada due to close economic ties.
  2. ‘America first’ policies likely to continue, regardless of election outcome
    • Biden’s proposed ‘Made in America’ tax incentive, which offers tax credits for companies in the U.S. that expand employment and salaries domestically, could potentially discourage future Canadian market expansion.
    • Trump’s protectionist tendencies would indicate Canada may see further headwinds with its largest trading partner if he’s re-elected.
    • Biden’s willingness to adopt Trump’s tough stance on China if elected suggests Canada will likely continue to be negatively affected by U.S.-China trade relations.
  3. U.S. election adds to the uncertainty of Canada’s oil & gas sector
    • Canadian oil pricing will be hit hard if Biden follows through on his campaign promise to cancel the Keystone XL pipeline, a critical venture for Western Canada oil producers that would provide direct access to the Gulf Coast refineries and world markets.
  4. The consumer sector accounts for most of Canada’s growth during recovery process
    • Consumer confidence’s summer comeback have influenced forecasts of a V-shaped GDP recovery in the coming quarters and sustained growth into 2022.
    • However, the recent resurgence of new infections has dealt a blow to recovery and consumer expectations.
  5. Labour market turnaround will be critical to continued economic progress, while turbulent times remain ahead for manufacturing sector
    • The service sector, which now employs nearly 80 per cent of the total labour force, lost 850,000 jobs since the start of the pandemic.
    • Danger of lingering damage to labour force through loss of skills & productivity, and the ability of an idle labour force to keep up with the acceleration in technological changes.
    • New manufacturing orders 11 per cent below their pre-crisis peak and roughly 5 per cent less than last year.

“Despite a rocky relationship between Canada and the current U.S. administration in recent years, it’s clear that a victory for either Trump or Biden would pose risks to Canada’s economy,” says Alex Kotsopoulos, vice president, projects and economics with RSM Canada. “The issue is that Canada has become increasingly dependent on its neighbour south of the border, and when you combine this with the strong ‘America First’ policies of both presidential candidates, Canada will feel the brunt of those decisions. Therefore, it’ll be important for the Canadian government to proactively engage with the new administration to shore up trade and supply chains, which will be vital in the Canada’s own recovery.”

Joe Brusuelas, chief economist with RSM US LLP, added: “When looking at Canada’s economic recovery data from the pandemic so far, it’s clear that the resurgence of Canada’s consumer sector has led the charge after a lengthy shutdown. However, to achieve stronger growth the labour force and industrial sector will be critical pieces of the puzzle, and while there is no meaningful or complete recovery until there is a vaccine, further expansion of the real economy by fiscal and monetary authorities will be important to keep recovery moving in the right direction.”

For more information on RSM Canada’s ‘The Real Economy: Canada‘, or to download the report, please visit: https://rsmcanada.com/our-insights/the-real-economy/the-real-economy-canada-volume-7.html

About RSM

RSM’s purpose is to deliver the power of being understood to our clients, colleagues and communities through world-class audit, tax and consulting services focused on middle market businesses. The clients we serve are the engine of global commerce and economic growth, and we are focused on developing leading professionals and services to meet their evolving needs in today’s ever-changing business environment.

RSM Canada LLP provides public accounting services and is the Canadian member firm of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in 120 countries. RSM Alberta LLP is a limited liability partnership and independent legal entity that provides public accounting services. RSM Canada Consulting LP provides consulting services and is an affiliate of RSM US LLP, a member firm of RSM International. For more information visit rsmcanada.com, like us on Facebook, follow us on Twitter and/or connect with us on LinkedIn.

SOURCE RSM Canada

For further information: Media contact: Ben Rose or Stephen Colle, FleishmanHillard HighRoad, 416-214-0701, [email protected]

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Economy

Statistics Canada says economy grew at a record pace in third quarter of 2020 – CP24 Toronto's Breaking News

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OTTAWA – Statistics Canada says the economy grew at a record annualized pace of 40.5 per cent in the third quarter as businesses came out of COVID-19 lockdowns.

The previous record for quarterly growth in real gross domestic product was 13.2 per cent in the first quarter 1965, the agency says.

As historic as the rebound was, it fell short of expectations.

Financial data firm Refinitiv says the average economist estimate was for an annualized growth rate of 47.6 per cent for the quarter.

The rebound over July, August and September was a sharp turnaround from the preceding three-month stretch which saw a record drop.

Driving the bounce-back were the further rolling back of public health restrictions that allowed businesses to reopen.

Statistics Canada also says there was a substantial increase in the housing market owing to low interest rates and household spending on goods like cars.

Despite the overall increase, the national statistics office says real gross domestic product still remains shy of where it was before the pandemic.

The third quarter ended with the fifth consecutive monthly increase in real GDP after the steepest monthly drops on record in March and April when widespread lockdowns were instituted to slow the spread of COVID-19.

September saw a 0.8 per cent increase in real GDP, Statistics Canada says, a slight slowing from the 0.9 per cent recorded in August.

The agency also provided a preliminary estimate for October’s figures, saying early indicators point to a 0.2 per cent increase in the month. The figure will be finalized at the end of this month.

“The fourth quarter of 2020 is still beginning with some growth, though less than we had anticipated,” CIBC senior economist Royce Mendes wrote in a note.

“Looking ahead, the economy faces a December with harsh restrictions that will likely see another contraction in economic activity.”

This report by The Canadian Press was first published Dec. 1, 2020.

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OECD sees global economy turning the corner on coronavirus crisis, led by Chinese recovery – The Globe and Mail

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An employee works on an automobile assembly line at a factory owned by Daimler in Kawasaki, Japan, on May 18, 2020.

Issei Kato/Reuters

The outlook for the global economy is improving despite a second wave of coronavirus outbreaks in many countries as vaccines emerge and a Chinese-led recovery takes hold, the OECD said on Tuesday.

The global economy will grow 4.2 per cent next year and ease to 3.7 per cent in 2022, after shrinking 4.2 per cent this year, the Organisation for Economic Cooperation and Development said in its latest Economic Outlook.

After a second wave of infections hit Europe and the United States, the Paris-based policy forum trimmed its forecasts from September, when it expected a global contraction of 4.5 per cent before a 5 per cent recovery in 2021. It did not have a 2022 forecast at the time.

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“We’re not out of the woods. We’re still in the midst of a pandemic crisis, which means that policy still has a lot to do,” said OECD chief economist Laurence Boone.

Overall global gross domestic product will return to pre-crisis levels by the end of 2021, led by a strong recovery in China, the OECD said.

But that masked wide variations among countries, with output in many economies expected to remain about 5 per cent below pre-crisis levels in 2022.

China will be the only country covered by the OECD to see any growth at all this year, at 1.8 per cent, unchanged from the last forecast in September. It will gain speed to 8 per cent in 2021 – also unchanged – before easing to 4.9 per cent in 2022.

The United States and Europe are expected to contribute less to the recovery than their weight in the global economy.

After contracting 3.7 per cent this year, the U.S. economy will grow 3.2 per cent in 2021 and 3.5 per cent in 2022, assuming a new fiscal stimulus is agreed. In September, the OECD had forecast a contraction of 3.8 per cent this year and a rebound of 4 per cent next year.

The euro area economy will contract 7.5 per cent this year, with many economies finishing the year in a double-dip recession after re-imposing lockdowns. Its economy will see growth return in 2021 at 3.6 per cent and 3.3 per cent in 2022.

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Though hard hit, the forecasts were an improvement from September, which had foreseen a contraction of 7.9 per cent this year and a 5.1 per cent rebound in 2021.

Finance Minister Chrystia Freeland says the Liberals plan a stimulus program of up to $100-billion once the COVID-19 pandemic is on the run, but until then attacking the virus and helping those who need support is their top priority. The Canadian Press

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Canada's economy bounced back at record 40% pace in third quarter — but GDP still below pre-COVID level – CBC.ca

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Statistics Canada said Tuesday the economy grew at a record annualized pace of 40.5 per cent in the third quarter as businesses came out of COVID-19 lockdowns.

The previous record for quarterly growth in real gross domestic product was 13.2 per cent in the first quarter of 1965, the agency said.

As historic as the rebound was, it fell short of expectations.

Financial data firm Refinitiv said the average economist estimate was for an annualized growth rate of 47.6 per cent for the quarter.

The rebound over July, August and September was a sharp turnaround from the preceding three-month stretch, which saw a record drop.

Driving the rebound were the further rolling back of public health restrictions that allowed businesses to reopen.

Statistics Canada also said there was a substantial increase in the housing market owing to low interest rates, as well as household spending on goods like cars.

GDP still lower than it was in February

Despite the overall increase, the national statistics office said real gross domestic product still remains shy of where it was before the pandemic.

The third quarter ended with the fifth consecutive monthly increase in real GDP after the steepest monthly drops on record in March and April when widespread lockdowns were instituted to slow the spread of COVID-19.

September saw a 0.8 per cent increase in real GDP, Statistics Canada said, a slight slowing from the 0.9 per cent recorded in August.

The agency also provided a preliminary estimate for October’s figures, saying early indicators point to a 0.2 per cent increase in the month. The figure will be finalized at the end of this month.

“The fourth quarter of 2020 is still beginning with some growth, though less than we had anticipated,” CIBC senior economist Royce Mendes wrote in a note.

“Looking ahead, the economy faces a December with harsh restrictions that will likely see another contraction in economic activity.”

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