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Budget 2022: Booming economy feeds federal focus on growth with $31B in new spending – Castlegar News

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The federal Liberals have delivered a budget that looks to take advantage of a boom in economic growth that has padded federal books, and turn that extra spending space toward removing hurdles to long-term gains.

However, experts cautioned that while the budget recognizes the country needs to do more to boost future growth, it fails to provide a clear road map of how to achieve prosperity in the coming years.

The economic boom since late last year has heaped $85.5 billion in new spending room, of which the government plans $56.6 billion in gross spending by 2027 targeted at speeding the flow of goods through the country’s supply chains, boosting housing supply and jolting businesses out of an anemic period of investment.

The new spending has increased the fiscal year’s deficit to $52.8 billion.

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Finance Minister Chrystia Freeland framed the spending as a hedge against near-term economic uncertainty created by Russia’s unprovoked invasion of Ukraine and the sixth wave of the COVID-19 pandemic.

But she said the spending is aimed at the long-term as well to address structural issues within the national economy that could hold back growth.

“Canadians understand that post-COVID, our country needs a growth strategy,” Freeland said in an afternoon news conference ahead of the budget’s release.

“We need to pay down our COVID debts and in a very uncertain 21st century Canada really needs an economic plan that is going to allow us to increase our productivity to increase our economic growth.”

It’s why the government reprofiled $15 billion in planned spending for a new fund designed to lower business investment risk for research and new technologies, $3.8 billion over eight years for a critical minerals strategy, and $450 million over five years to unclog supply chains.

Dennis Darby, president of Canadian Manufacturers and Exporters, said welcomed those measures, but said the budget failed to address labour shortages: “This is a miss.”

The document also looks to spend money from budgets past by forcing provinces to allocate nearly $7.3 billion in outstanding infrastructure dollars by next March or risk losing the money. Timelines to spend the money have also been pushed back from 2027 to 2033.

The government’s budget admits to hurdles to Canada’s long-term growth prospects, though falls short of a detailed economic strategy, said Robert Asselin, senior vice-president of policy with the Business Council of Canada.

“They are admitting at least that stuff they have been doing is not working. That’s a great start,” he said. “But I think to their own admission, they’re still not sure on where to go next.”

Rebekah Young, Scotiabank’s director of fiscal and provincial economics, said some measures should drive higher growth potential over the medium-term, but noted the lack of details marked a “missed opportunity to set out a national vision for future prosperity over the long run.”

The budget forecasts 3.9 per cent economic growth this year but expects that to slow over the ensuing four years to average 2.9 per cent annual growth in real gross domestic product.

Inflation too is expected to fall from 3.9 per cent this year — an upward revision to December’s fiscal update — back toward the Bank of Canada’s target of two per cent next year. The hot pace of price increases was something the government kept in mind while crafting the budget, Freeland said.

Unemployment is expected to stay at a low of 5.5 per cent over the forecast horizon.

Economist Armine Yalnizyan, an Atkinson Fellow on the Future of Workers, said the budget was a missed opportunity to invest in health-care workers, for example, to keep workers from leaving the care economy that accounts for one-fifth of GDP.

“You can build the middle class of the next century,” she said. “But only if you decide you’re going to make every job a good job, and make sure there are people there to do that work.”

Total spending this fiscal year declines to $452.3 billion, including debt servicing costs, from the $497.9 billion in the preceding 12-month period as emergency pandemic aid measures end.

The Canadian Federation of Independent Business was disappointed supports for small firms were ending, and the Canadian Chamber of Commerce noted the absence of debt relief for businesses could undermine growth plans.

The budget forecasts the debt as a percentage of the economy will hit 45.1 per cent this year and then decline, even in a worst-case scenario envisioned in the document.

Randall Bartlett, senior director of Canadian economics at Desjardins, said the government has put some of its financial windfall into the bank for a rainy day given the uncertain environment, and held back on moving ahead with a handful of election promises in this budget.

“There will be some people who aren’t happy ultimately with the budget, I think, as a result, and maybe not understanding why they put that windfall aside, but I think it’s the prudent thing to do,” he said.

Missing from the spending outlook are measures like pharmacare promised as part of the Liberals’ deal with the NDP. Nor did the document pump out the full suite of Liberal campaign pledges.

Freeland said this was the first of four budgets the Liberals expect to deliver before the next federal election, which could happen in 2025 if the NDP prop up the government until then.

“Yes, we will do more things over the next three budgets,” she said. “We will, however, do those additional things, fulfil those further promises within an absolutely responsible fiscal framework.”

The government rolled out a tax on excess profits at banks and insurance companies the Finance Department expects to reel in $6.1 billion over five years to add revenues into the fiscal framework. The budget also warned the country’s top earners that the government plans to change their minimum tax rate, with details later this year.

The Liberals are also promising a spending review to find $6 billion in savings over five years. A progress report is promised for next year’s budget.

—Jordan Press, The Canadian Press

MORE ON THE BUDGET:

Budget 2022: Feds add measures to curb speculation as housing supply gets $10B boost

Budget 2022: Liberals devote $4.3 billion to Indigenous housing needs

Budget 2022: Plan makes good on dental care but offers little in new health spending

Budget 2022: Liberals rejig $15B toward new business investment fund

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Covid has hit China's economy harder than expected – CNN

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Hong Kong (CNN Business)China has reported disappointing economic data for the month of April, underscoring the extensive damage Covid lockdowns have wreaked on the country.

The world’s second largest economy reported shocking drops in retail sales and factory production, widely missing market expectations.
Retail sales plunged 11.1% in April from a year ago, according to China’s National Bureau of Statistics on Monday. That was well below the 6.1% drop forecast in a Reuters survey of economists, and also much lower than the 3.5% decrease seen in March.
A man walks his dog through the nearly empty courtyard of the usually bustling Taikoo Li mall in Sanlitun after many retail stores were closed to help prevent the spread of COVID-19 on May 10, 2022 in Beijing, China.

A man walks his dog through the nearly empty courtyard of the usually bustling Taikoo Li mall in Sanlitun after many retail stores were closed to help prevent the spread of COVID-19 on May 10, 2022 in Beijing, China.

Industrial production fell 2.9% last month from a year earlier, reversing a 5% gain in March.
This marks the worst contraction in industrial production since February 2020, when China’s economy came to a near standstill during the initial coronavirus outbreak.
Unemployment also surged to the second highest level on record.
The urban jobless rate hit 6.1% in April, up from 5.8% in March — which was already at a 21-month high. The only time China’s jobless rate was higher was in February 2020.
Young people have been finding it especially hard to find jobs, the data showed, with the unemployment rate for those between 16 to 24 years of age rising to 18.2% — the highest ever.
Rising unemployment is a warning sign for the ruling Communist Party given the risk of social and political instability.
“After all, zero-Covid at the cost of surging unemployment is a hard sell politically,” said Larry Hu, chief China economist for Macquarie Capital.
The government expects the economy to rebound this month.
“Economic performance” in May will improve, said NBS spokesperson Fu Linghui on Monday.
“As the outbreaks are under control and people’s life return to normal, pent-up consumption will be gradually released,” he said.
Increased investment in infrastructure projects will also support the recovery, he added.

Hefty blow

China’s economy was off to a solid start in 2022, recording 4.8% growth for the first quarter.
But Beijing’s efforts to curb its worst Covid outbreak in two years have dealt a hefty blow to activity since March, and economists now expect GDP to shrink this quarter.
So far, at least 31 cities in the country remain under full or partial lockdown, according to CNN’s latest calculations. Shanghai, the country’s financial center and a manufacturing hub, has been under lockdown for more than six weeks. During this period, many companies have been forced to suspend operations, including automakers Tesla (TSLA)and Volkswagen (VLKAF) and iPhone assembler Pegatron.
“We think Q2 GDP growth will likely turn negative,” said Zhiwei Zhang, president and chief economist for Pinpoint Asset Management, on Monday.
“The government faces mounting pressure to launch new stimulus to stabilize the economy,” Zhang said.
The leadership in China is aware of the economic pains and has taken some steps recently to bring relief.
The People’s Bank of China announced Sunday that it would cut the mortgage rate for first-time homebuyers, in a move to lift the ailing property market.
Separately, the Shanghai government said the city will gradually open shops, restaurants, and salons from Monday, which will be a relief for its 25 million residents.
The government has also recently pledged to prop up the economy through more infrastructure spending and targeted monetary easing to support small businesses.
Monday’s data showed investments in manufacturing increased 12.2% from a year ago. Infrastructure investment, meanwhile, rose 6.5%.
But “the risks to the outlook are tilted to the downside, as the effectiveness of policy stimulus will largely depend on the scale of future Covid outbreaks and lockdowns,” said Tommy Wu, lead China economist for Oxford Economics, on Monday.
“We forecast GDP to grow 4% this year, with a quarterly contraction in the second quarter before returning to growth in the second half.”
— CNN’s Beijing bureau contributed to this report.

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US Recession Risk, Wheat Watch, Chinese Economy Jolt: Eco Day – Bloomberg

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US Recession Risk, Wheat Watch, Chinese Economy Jolt: Eco Day  Bloomberg



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Rural development grants to spark Nicola Valley economy – Global News

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The province announced on Friday a series of rural development grants in the Nicola Valley to support economic development and diversification.

This is the next step in the StrongerBC Economic Plan and the ongoing recovery efforts in Merritt following the floods in November last year.

“People in Merritt have been through a lot in the past year, and they know how important business recovery is for community rebuilding,” said parliamentary secretary for rural and regional development Roly Russell in a press release.

The provincial government is providing a $1-million rural development grant to the Small-Scale Meat Producers Association to build a community abattoir in the Merritt area.

Read more:

B.C. announces $228M to help farmers, ranchers impacted by floods

This will provide meat processing and cut-and-wrap services to local farmers and ranchers.

“This project represents significant job and economic opportunities for the region, while ensuring local ranches, abattoirs and businesses are part of a strong, resilient B.C. food system,” said minister of agriculture and food Lana Popham in a press release.

“With the recent changes to B.C.’s meat-licensing system and investments in facilities like the Nicola Valley community abattoir, this revitalization of the small-scale meat industry makes it easier to produce, buy and sell B.C. meat in our rural communities, and helps strengthen our food security and food resiliency.”

The abattoir will be a government-inspected licensed facility with a full range of services to process red meat.

According to the province, local producers have been impacted by the lack of processing capacity. Julia Smith who is a pork and beef producer in Merrit is hopeful this new facility will help her business as well as other local producers.

“My partner and I moved to the Nicola Valley in 2016 planning to expand our business to meet the growing demand for well-raised, local meat. But we soon found that the processors we relied upon were not able to keep up with our production and we had to scale the business back instead of growing it.”


Click to play video: 'More than 900 people still displaced following Merritt flooding last fall'



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More than 900 people still displaced following Merritt flooding last fall


More than 900 people still displaced following Merritt flooding last fall – Feb 25, 2022

“We were on the verge of giving up. But now we are ready to press on, because this facility will allow us, and other local family farms and ranches, to grow and thrive while providing greater food security for the community.”

The province is providing a $1-million rural development grant to the Scw’exmx Tribal Council toward Gateway 286 in Merritt.

“After an unbelievable year of fires, floods, and a pandemic, we welcome the B.C. government’s $1-million grant that will bolster our rural community, support good-paying jobs and much-needed economic development,” said Spayum Holdings LP director and Scw’exmx Tribal Council Terrence (Lee) Spahan in a press release.

“The Gateway 286 project is a 30-plus-year vision of past and present Nicola Valley Indigenous Chiefs and these monies will take our commercial and tourism development one more step closer to reality. This project will enhance the experience of the [traveling] public by providing much-needed services, and it will provide good-paying jobs and entrepreneurial opportunities for the residents of the Nicola Valley.”

Meanwhile, the City of Merritt is receiving a $500,000 grant related to economic recovery for communities that were affected by the flooding. The grant will go towards completing economic development projects and initiatives to support long-term economic recovery.

This is in addition to $329,000 in provincial funding for the City of Merritt to update flood-hazard mapping and develop new flood-mitigation plans.


Click to play video: 'Anger grows over Merritt evacuations'



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Anger grows over Merritt evacuations


Anger grows over Merritt evacuations – Nov 28, 2021

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