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Canada's Economic Outlook More Optimistic Than Before, However Industry and Trade Still in Shock, Suggests RSM Canada's Report – Canada NewsWire

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  • Short-term data suggests economic activity across Canada is on the rise.
  • Report also shows that the shift to remote work has been harder for provinces with a focus on natural resources, as well as for older demographics.
  • Expedited government investment will be required to accelerate recovery and pay down national debt following the COVID-19 pandemic.

TORONTO, July 14, 2020 /CNW/ – RSM Canada (“RSM”), the leading global provider of audit, tax and consulting services focused on middle market businesses, today launched its second 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.

As Canada moves past the initial shutdown phase of the COVID-19 pandemic and provinces start to reopen, the Real Economy: Canada report shines a light on the economic impact of the pandemic so far, what the outlook is for the near future, and explores some of the measures government and other authorities can take as the country looks towards its recovery.

Key findings in this quarter’s report include:

  1. After a big drop in April, Canada’s economy is slowly on the up, according to high-frequency data from re-opening provinces.
    • Data such as transport use, and even restaurant bookings, show that the economy is performing better than predicted after a drop of 11.6 per cent in April.
  2. Despite promising economic indications, Canada’s industrial sector is at the same level of distress as in the Great Depression.
    • Signs of economic recovery don’t offset the huge shock to trade and supply chain.
    • Industry’s contribution to GDP industry fell by nearly 6 per cent in March, and new orders dropped by nearly 40 per cent in April.
    • The sector was already in decline due to the worldwide manufacturing recession brought on by the U.S. trade war.
  3. To continue economic recovery, and to pay down national debt following the pandemic, the government and authorities need to boost investment today.
    • Canada’s national debt will increase following the pandemic, and the country will need to ‘grow’ its way out of it.
    • Three key investment areas to boost productivity include:
      1. Digital infrastructure – for example, continue investment in broadband projects for more rural areas of Canada
      2. Investment in goods movement
      3. Investment to reduce congestion in urban centres
  4. Certain provinces, industries and age groups are at risk of being left behind in Canada’s shift to remote work.
    • While 40% of the labour force in provinces like Ontario and British Columbia are capable of working from home, only 30 per cent are able in provinces with a greater focus on natural resources.
    • Those who are younger and have obtained college educations or higher are more likely to be able to work from different locations. Meanwhile, those older than 44 have a reduced capacity to work through digital means.
    • While 85 per cent of those employed in finance, education or professional vocations can work remotely, only 10 to 25 per cent are able in the retail, manufacturing and agricultural industries.

“The pandemic has certainly dealt a tough blow to Canada’s industrial sector – an area already struggling back in 2019 as a result of the ongoing trade war between the U.S. and China,” said Joe Brusuelas, chief economist with RSM US LLP. “Despite some promising short-term economic indicators, and the Bank of Canada’s steps to accommodate stimulus measures, it’s imperative that the authorities make prudent investments to keep industrial recovery moving in the right direction and look to boost trade efforts as much as possible.”

“Following the slow re-opening of provinces, short-term data shows that the Canadian economy is performing at a better rate than previously predicted,” adds Alex Kotsopoulos, partner, projects and economics with RSM Canada. “However, it’s likely that provinces with a greater proportion of their economy dedicated to areas such as natural resources will lag behind others, and additional investment or focus may be needed to support these areas.”

“As we look to the future, the financial measures taken to address this pandemic will increase Canada’s national debt, and the country will essentially need to grow its way out of that debt” continues Kotsopoulos. “By making important investments today in areas such as infrastructure and goods movement, the federal government can get ahead early and begin to set the groundwork for that growth.”

For more information on ‘The Real Economy: Canada‘ or to download the report, visit RSM Canada’s website: https://rsmcanada.com/our-insights/the-real-economy/the-real-economy-canada-volume-6.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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Kuwaitis go to polls as economy poses challenge for new emir – TheChronicleHerald.ca

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By Ahmed Hagagy

KUWAIT (Reuters) – Kuwaitis voted in legislative polls on Saturday with the Gulf state mired in its worst economic crisis in decades, which poses a challenge for the government’s often stormy relationship with a parliament blamed for blocking reforms.

More than 300 candidates, including 29 women, are vying for 50 seats in the Gulf’s oldest and most outspoken assembly with legislative powers. Critics say it has stalled investment and economic and fiscal reform in the cradle-to-grave welfare state.

Campaigning, which took place mostly on social media and local TV channels due to COVID-19 restrictions, has focused on the economy, corruption and demographics in a country where foreigners make up the bulk of the workforce.

“Kuwait needs development. The streets are broken and there is no development and no economy … and coronavirus has affected everything in every way,” said Ibrahim, a government employee, after voting in Kuwait city.

Turnout is expected to be lower than in past elections due to concerns about COVID-19 which, along with low crude prices, has battered state finances in the wealthy oil-producing nation.

A low turnout could strengthen the hand of tribal, Islamist and other candidates who can rally supporters to head to polling centres, analysts said.

“Kuwaiti opposition who boycotted (previous) polls are moving to run and vote, and this could strengthen their presence,” said Kuwaiti political analyst Mohamad al-Dosayri.

Frequent clashes between the cabinet and the assembly have led to successive government reshuffles and dissolutions of parliament. Kuwait’s emir, who has the final say, picks a prime minister who selects a cabinet.

The current government is due to resign after the elections.

Sheikh Nawaf al-Ahmad al-Sabah took the reins as emir in September following the death of his brother.

FACE MASKS AND SANITIZER

Kuwait’s economy, which is worth nearly $140 billion, is facing a deficit of $46 billion this year. A government priority is to overcome legislative gridlock on a bill that would allow Kuwait to tap international debt markets.

Sheikh Nawaf has called for unity to face challenges at home and in a region experiencing heightened tension between Kuwait’s larger neighbours Saudi Arabia and Iran.

Late ruler Sheikh Sabah al-Ahmad broke the hold of opposition groups on parliament in 2012 by using executive powers to amend the voting system, sparking large protests.

Under the old electoral system, voters were allowed to cast ballots for up to four candidates, which the opposition says allowed alliances that partly made up for the absence of political parties, which are officially barred.

The system introduced in 2012 allows votes for only a single candidate, which the opposition says makes alliances difficult.

At al-Waha School in Jahra City, a polling station for men, voters in Arab robes protected themselves with face masks and hand sanitizers before putting their votes into the ballot box.

About 20 female observers watched a male judge checking the identity of women voters at the Bahsira school for girls before they cast their ballots.

Kuwaiti opposition figures have proposed electoral reforms and a pardon for dissidents, many in self-exile.

“There have been some reforms in the judiciary and the Emiri Diwan,” or court, said a Kuwaiti politician who asked not to be named. “We heard echoes of more reforms after elections.”

(Reporting by Ahmed Hagagy in Kuwait; Additional reporting by Stephanie McGehee; Writing by Aziz El Yaakoubi; Editing by William Mallard and David Clarke)

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Confused by the economy during the COVID-19 pandemic? Don't worry, so are the economists – CBC.ca

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The numbers can be so big, they’re hard to get your head around. The swings are so volatile, you can lose your footing.

And yet, with millions of Canadians struggling through the COVID-19 crisis, many of us want to understand what is going on with the economy.

“My head is spinning, too,” said Benjamin Tal, deputy chief economist at CIBC. “So I don’t blame people, because we’ve never seen anything like this.”

Every week, a flood of new data comes out. This week, we were inundated with the federal government’s fiscal update, GDP figures and job numbers. All trying to shape the story of the economy. Sometimes the numbers contradict each other. Sometimes they give a sort of head-fake and contradict themselves.

The fiscal update that came out on Monday had built all its projections on an average of the forecasts from the big banks. The next morning, Statistics Canada released quarterly GDP numbers that missed the forecast by a staggering seven points. By the end of the week, jobs data came out showing Canadian employers added three times as many jobs as expected.

Like many businesses these days, Scout, a gift shop in Toronto that sells products made by local artisans, is having to adjust how it operates. (Submitted/Leah Eyles)

Every economist is trying to figure out what those numbers are telling us. And they’re not always getting it right.

“Economists have never been more wrong about where the data would come through,” said Frances Donald, chief economist and head of macro strategy at Manulife Investment Management in Toronto.

New methods

Most of the time, she said, economists rely on data such as job growth and retail sales numbers to make sense of the situation. The problem is those statistics tell us what was happening months ago.

“This is a daily crisis that requires daily data points,” she said.

To combat that, economists have turned to higher frequency data such as google mobility trends, restaurant reservation tallies and public transit numbers.

Shops in Toronto’s Roncesvalles neighbourhood hang posters in their storefronts encouraging people to buy local. (Evan Mitsui/CBC )

But Donald said the bigger issue is the unique, unprecedented nature of this crisis. 

“We don’t have a functional precedent for what is happening,” she said.

There may be other moments in the past that share some similarities, but nothing experts can use to model probable outcomes.

Change of perspective

Tal said he understands why more Canadians than usual seem to be following economic updates with bated breath. But he said the best option is to focus less on the details and think of the broader economic themes.

So, while the short term is bad, he said, the medium term looks better.

“We are buying time at this point,” he said, until the virus comes under control. 

Deputy Prime Minister and Minister of Finance Chrystia Freeland speaks to news media before unveiling her fall economic statement earlier this week. (Blair Gable/Reuters)

Yes, the world is headed into a long and dark winter, he said. Yes, COVID-19 cases are rising and government-imposed restrictions could spread. And, yes, households and businesses will need government support and record-low interest rates to provide them a bridge to the second half of next year, he said.

 

But if you zoom out and look at the longer-term forecasts, the second half of next year shows a lot of promise. Tal said the economic crisis is largely due to the fact that people aren’t spending as much as they normally would.

Some of that is because of government-mandated closures.

But some of it is also a question of confidence.

Even if the movie theatres were open, how many people would pay to sit in close contact with strangers for a two-hour film?

Looking ahead

That spending issue is a large source of the hope for 2021. Tal calculates that Canadian households and businesses are sitting on $170 billion in savings. And once the virus comes under control, he predicts that money will spill back into the economy.

“I see this unleashing of potential demand in the economy,” he said. “Most of it will be in the services sector. And that will benefit employment for people that are struggling. It’s just a question of time.”

So, in the interim, he recommends not getting too caught up in the minutiae of the daily economic data.

That’s advice financial markets seem to be following. As COVID-19 case counts soar and government-imposed restrictions spread, the major stock market indexes are all climbing. Donald said markets seem to be looking past the short- and medium-term unknowns and banking on a solid return next year.

WATCH | The National’s report on the fall economic update: 

The government unveiled a record deficit of $381 billion in its fiscal update, along with spending plans for more pandemic relief and a huge stimulus plan to jolt the economy post-pandemic. 2:18

She said the markets don’t seem to be too caught up in the daily barrage of economic information.

“The markets are thinking ahead to where we are going to be in 6, 12, 48 months,” she said. “Not where we are at this very moment.”

Besides, she said, one of the best indicators available is to just look around and see how people around you are acting. Are people nervous and scared? Are they staying home or are they out shopping? The data will catch up to our behaviour eventually. 

“You don’t need a PhD in economics to look around at your friends and family and get a sense of what their behaviour is,” she said. “We don’t need numbers and releases, we just need to look out our front doors.”

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Kuwaitis go to polls as economy poses challenge for new emir – The Guardian

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By Ahmed Hagagy

KUWAIT (Reuters) – Kuwaitis vote in legislative polls on Saturday as the Gulf state faces its worst economic crisis in decades, posing a challenge for the government’s often stormy relationship with parliament, that has hampered fiscal reform.

Turnout is expected to be lower than in past elections due to concern over COVID-19, which along with low crude prices, has battered state finances in the wealthy oil-producing nation. Low turnout could strengthen the showing of tribal, Islamist and other candidates who can rally supporters to head to polling centres, analysts said.

“Kuwaiti opposition who boycotted (previous) polls are moving to run and vote, and this could strengthen their presence,” said Kuwaiti political analyst Mohamad al-Dosayri.

More than 300 candidates, including 29 women, are vying for 50 seats in the Gulf’s oldest and most outspoken assembly with legislative powers. Critics say parliament has long stalled investment and economic and fiscal reform in the cradle-to-grave welfare state.

Frequent clashes between the cabinet and assembly have led to successive government reshuffles and dissolutions of parliament. The emir, who has final say, picks a prime minister who selects a cabinet. The current government is due to resign after the elections.

Sheikh Nawaf al-Ahmad al-Sabah took the reins as emir in September following the death of his brother.

Campaigning, which took place mostly on social media and local TV channels due to COVID-19 measures against gatherings, has focused on the economy, corruption and demographics in a country where foreigners make up the bulk of the workforce.

“The issues are the same – health, education, housing – as none of these have been resolved yet,” government employee Hamad al-Otaibi, 43, told Reuters ahead of the elections.

The nearly $140 billion economy is facing a deficit of $46 billion this year. A priority will be overcoming legislative gridlock on a bill that would allow Kuwait to tap international debt markets.

OPPOSITION

Sheikh Nawaf has called for unity to face challenges at home and in a region experiencing heightened tension between Kuwait’s larger neighbours Saudi Arabia and Iran.

Late ruler Sheikh Sabah al-Ahmad in 2012 broke the hold of opposition groups on parliament by using executive powers to amend the voting system, sparking large protests.

Under the old electoral system, voters were allowed to cast ballots for up to four candidates, which the opposition says allowed alliances that partly made up for the absence of political parties, which are officially barred.

The system introduced in 2012 allows votes for only a single candidate, which the opposition says makes alliances difficult.

Kuwaiti opposition figures have proposed electoral reforms and a pardon for dissidents, many in self-exile, to the new emir.

“There have been some reforms in the judiciary and the Emiri Diwan,” or court, said a Kuwaiti politician who asked not to be named. “We heard echoes of more reforms after elections.”

(Reporting by Ahmed Hagagy in Kuwait; Additional reporting by Aziz El Yaakoubi in Dubai; Editing by William Mallard)

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