By Fergal Smith
TORONTO (Reuters) – Canada should focus on boosting economic growth after getting pummeled by the COVID-19 crisis, analysts say, even as concerns about the sustainability of its debt are growing, with Fitch downgrading the nation’s rating just over a week ago.
Canadian Finance Minister Bill Morneau will deliver a “fiscal snapshot” on Wednesday that will outline the current balance sheet and may give an idea of the money the government is setting aside for the future.
As the economy recovers, some fiscal support measures, which are expected to boost the budget deficit sharply, could be wound down and replaced by incentives meant to get people back to work and measures to boost economic growth, economists said.
“The only solution to these large deficits is growth, so we need a transition to a pro-growth agenda,” said Craig Wright, chief economist at Royal Bank of Canada.
The IMF expects Canada’s economy to contract by 8.4% this year. Ottawa is already rolling out more than C$150 billion in direct economic aid, including payments to workers impacted by COVID-19.
Further stimulus measures could include a green growth strategy, as well as spending on infrastructure, including smart infrastructure, economists said. Smart infrastructure makes use of digital technology.
“We have to make sure that government spending is calibrated to the economy of the future rather than the economy of the past,” Wright said.
Canada lost one of its coveted triple-A ratings in June when Fitch downgraded it for the first time, citing the billions of dollars in emergency aid Ottawa has spent to help bridge the downturn caused by COVID-19 shutdowns.
Standard & Poor’s, Moody’s and DBRS still give Canadian debt the highest rating. At DBRS, Michael Heydt, the lead sovereign analyst on Canada, says his concern is about potential structural damage to the economy if the slowdown lingers too long.
Fiscal policymakers “need to be confident that there is a recovery under way before they start talking about (debt) consolidation,” Heydt said.
Fitch expects Canada’s total government debt will rise to 115.1% of GDP in 2020 from 88.3% in 2019.
Royce Mendes, a senior economist at CIBC Capital Markets, said the economy still needs more support.
“Turning too quickly toward austerity would be a clear mistake,” he said.
(Reporting by Fergal Smith; Editing by Dan Grebler)
City Council approves ideas meant to stimulate the local economy – EverythingGP
Photo by Curtis Galbraith
Aug 12, 2020 5:30 AM
City Council has decided how it wants to allocate some of the money in an economic recovery fund set up in response to the pandemic.
The biggest share, $450,000, will go into the Beautification & Patio Grant for businesses across the city. The grants would cover half the cost, up to $15,000, of adding a patio or improving signage, facades, or landscaping.
Mayor Bill Given says the city wants to stimulate the economy by having owners re-invest in their businesses.
“This new program is essentially modelled after our very successful Downtown Incentive Program. (It) led to the redevelopment of a lot of the facades on downtown businesses was also a matching grant program and for every $1 the city invested in that program; we saw about $4 in actual economic activity happen. So, we saw this as a really great opportunity for those property owners who are interested and willing to partner with the city in upgrading their businesses and improving the general appearance of the community and that is something that puts tradespeople to work immediately.”
UK crashes into deepest recession of any major economy – CNN
U.K. economy officially in recession after 20.4 per cent Q2 slump – CTV News
The U.K. economy has officially fallen into a recession after official figures showed it contracting by a record 20.4 per cent in the second quarter as a result of lockdown measures put in place to counter the coronavirus pandemic.
The slump recorded by the Office for National Statistics follows a 2.2 per cent quarterly contraction in the first three months of the year. As such, the U.K. economy is in a recession — commonly defined as two quarters of negative growth.
Unlike other countries, Britain’s statistics agency provides monthly figures to accompany the quarterly numbers and these show some hope that the economy is healing in the wake of the easing of some lockdown restrictions. In June, when shops selling non-essential goods were allowed to reopen, the British economy grew by a monthly rate of 8.7 per cent.
“The economy began to bounce back in June with shops reopening, factories beginning to ramp up production and house-building continuing to recover,” said statistician Jonathan Athow.
Despite this, he said the economy remains a sixth below its level in February, before the virus started to impact.
The British government hopes that the further easing of the economy over recent months, such as the reopening of the hospitality sector in July, will allow the economy to claw back further ground.
McDavid, Draisaitl need to be more 'battle-tested,' Oilers GM says – NHL.com
Google Is Launching a Global Earthquake-Detection Network – WIRED
Alberta to provide COVID-19 update Wednesday afternoon – Global News
Silver investment demand jumped 12% in 2019 – report – MINING.com
Iran anticipates renewed protests amid social media shutdown
Richmond BBQ spot speaks out about coronavirus rumours Vancouver Is Awesome
- Science15 hours ago
The 2020 Perseid meteor shower is peaking: How to watch the show – CNET
- Sports22 hours ago
Mock 2020 NHL Draft: Lafreniere to Rangers, Wild get No. 9 pick – NHL.com
- Tech17 hours ago
Apple’s Radical iPhone 12 Upgrade Suddenly Confirmed – Forbes
- Sports18 hours ago
GARRIOCH: The New York Rangers will likely listen to offers on their No. 1 pick in the NHL draft – Ottawa Sun
- Art15 hours ago
Nine decades of art: Meet a Merrickville man still creating paintings and sculptures – CTV Edmonton
- Art22 hours ago
House of PainT adapts during the pandemic, creates interactive street art map – CBC.ca
- Health15 hours ago
Runners: stop wearing a neck gaiter as a mask – Canadian Running Magazine
- Economy17 hours ago
Laval C of C forum contemplates the post-COVID-19 economy – Laval News