The Canadian economy grew at an annualized rate of 3.1 per cent in the first quarter of 2023, Statistics Canada reported Wednesday.
The latest data shows growth beat out the federal agency’s own forecast of 2.5 per cent for the quarter. A preliminary estimate suggests the economy grew by 0.2 per cent in April, after remaining flat in March.
The ongoing resilience in the economy will likely spur discussions of a potential rate hike, as the Bank of Canada is expected to make its next interest rate announcement next week.
The relatively strong GDP showing had investors increasing the odds of a rate hike when the central bank meets next week. Prior to the GDP numbers, trading in investments known as swaps was implying a litle over a one-in-four chance of a hike.
Now, those odds are better than one-in-three.
Statscan says growth in exports and household spending helped spur growth in the first quarter. On the other side of the ledger, slower inventory accumulations as well as declines in household investment and business investment in machinery and equipment weighed on growth.
Tuan Nguyen, an economist with consulting firm RSM Canada, says the GDP numbers “blew past expectations.”
“After a slow final quarter of last year, the Canadian consumers and businesses came out strong in the first quarter, defying rising recession concerns that most market participants have been talking about,” Nguyen said. “There is no doubt that the data pointed to a hot economy, explaining why underlying inflation has remained elevated.”
Stubbornly high inflation
The Canadian economy has managed to continue outperforming expectations, despite the Bank of Canada hoping high interest rates would cause a more profound pullback by consumers and businesses.
The household spending figures show spending up on both goods and services in the first three months of the year, after minimal growth in the previous two quarters.
However, the report notes disposable income fell for the first time since the fourth quarter of 2021. The federal agency says disposable income declined by one per cent, largely due to the expiration of government measures aimed at helping people cope with inflation.
The central bank paused its rate-hiking cycle earlier this year, keeping its key interest rate at 4.5 per cent — the highest it’s been since 2007.
But the central bank’s governor, Tiff Macklem, has signalled that the bank is still trying to figure out if interest rates are high enough to quash inflation.
The headline inflation rate ticked up slightly to 4.4 per cent in April, remaining well above the central bank’s two per cent target.
How petro-nations are approaching the shift to net zero and the future of oil – CBC.ca
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Sudan’s vital date industry struggles in war-decimated economy
Prices have collapsed in the vital date industry, the latest economic sector to become a casualty of war in the northeast African country.
Every autumn, until this September, date farmers in northern Sudan pulled their harvests down from palm trees, securing a living for months to come.
But five months into the war between Sudan’s rival generals, the country’s economic infrastructure has been destroyed and “buyers are scared”, farmer Al-Fatih al-Badawi, 54, told AFP.
Sudan is the world’s seventh-largest producer of dates, growing more than 460,000 tonnes per year, according to the United Nations Food and Agriculture Organisation.
How much of that figure will be available this year remains to be seen, but farmers in northern Sudan are lucky they could manage a harvest at all.
In Karima — a town on the Nile River about 340 kilometres (210 miles) north of the capital Khartoum — the groves bustle with young men climbing date palms, dropping bunches of the brown fruit, beloved by Sudanese, onto white sheets below.
Farmers who depend on the date industry face colossal challenges moving their products across the country, as do those in other agricultural sectors.
Along with insecurity, wartime fuel shortages have severely hindered the ability to transport goods.
Before the war, nearly all trade in highly centralised Sudan went through Khartoum.
But constant air strikes, artillery blasts and street battles have left the capital largely off-limits to traders, who fear for their safety or are turned back by fighters at checkpoints.
“Our main market was Khartoum”, Badawi said. Without it, trade is at a standstill and the price for his crop is in freefall.
Land left fallow
In Sudan, one of the world’s most underdeveloped countries, dates and other agricultural products were a foundation of the pre-war economy.
The agriculture sector employed more than 80 percent of the workforce and accounted for 35 to 40 percent of gross domestic product, according to the United Nations.
But now, in much of the country including southeastern Gedaref state, known as Sudan’s breadbasket, the land has been left fallow.
Processing factories have been razed or looted.
Smallholder farmers have no access to financing, traders have no guarantees of viable markets and industry heavyweights have given up.
In May, Haggar Group — one of the agriculture sector’s largest employers — suspended operations and laid off thousands of labourers.
Even before the war began, one in three people were in need of humanitarian aid and the country’s farmers — unable to meet domestic food security needs — struggled to break even.
The date sector in Karima had been in urgent need of “guidance and agricultural policy”, as well as resources to reduce high rates of waste, said Al-Jarah Ahmed Ali, 45, another farmer.
Now the challenges have only worsened.
Since April 15, fighting between army chief Abdel Fattah al-Burhan and his former deputy, Mohamed Hamdan Daglo, commander of the paramilitary Rapid Support Forces, has torn Sudan apart.
Fighting has killed nearly 7,500 people, according to a conservative estimate from the Armed Conflict Location & Event Data Project.
More than 4.2 million people — most of them from the Khartoum area — have been displaced within Sudan, and another 1.1 million have fled the country, according to the International Organization for Migration.
Agricultural workers are among those joining the exodus, and while they may find relative safety in northern Sudan, whether they can earn enough to survive in a collapsing date market is questionable.
Among them is Hozaifa Youssef, a 26-year-old radiologist who left Khartoum to rejoin his family in Karima, where he is helping with the date harvest.
“I was going to India to get my master’s degree,” but that goal is now on hold, Youssef said.
The veteran farmer, Badawi, has not lost hope.
“We’re trying to find new markets, even though it’s going to be more expensive. Hopefully, the price will adjust and it will all work out.”
China’s Global Travelers Pull Back as Economic Uncertainty Grows
(Bloomberg) — More Chinese travelers are delaying outbound plans amid economic uncertainty, according to a new survey, potentially rough news for countries depending on one of the world’s biggest source of tourists.
A September survey by consultancy Oliver Wyman found that 54% of respondents — all experienced travelers who had been abroad before the pandemic shut Chinese borders — said they planned to travel in 2023, down from 62% polled in June.
Some 22% said they didn’t have plans to venture overseas for the next three years, up from just 6% in June.
Respondents needed to meet a minimal monthly household income of 30,000 yuan ($4,105), representing the country’s middle class — a key driver being counted on to help boost China’s post-Covid consumption recovery. While spending on experiential services like travel and eating out has been resilient this year, questions have risen about whether that’s sustainable.
“While Chinese travelers are returning, it’s taking longer than we expected when the border reopened,” said Imke Wouters, an Oliver Wyman partner who led the research.
The survey also showed 32% of respondents saying their willingness to travel abroad had decreased amid the current economic downturn and political situation, while only 19% said they were more inclined to take international trips.
Enthusiasm for domestic travel remained strong, meanwhile, with 35% saying they were more disposed to journey within China, and just 14% decreasing.
China’s economy picked up steam in August as a summer travel boom and stimulus push boosted consumer spending and factory output, adding to nascent signs of stabilization. Still, the upcoming 8-day Golden Week holiday will be another test of whether Beijing’s recent efforts to bolster the economy are starting to bear fruit.
More than 21 million people are expected to fly during the holiday, starting from this Friday, sending airfares climbing. Domestic tourism spots — and short-haul Asian destinations such as Thailand, Japan and Korea — are among the top choices.
Read more: Millions to Take to Skies as China Gears Up for Long Golden Week
And it’s not just travel: the middle class’s worries about the economy may also be reflected in their luxury expenditures. Of the casual luxury shoppers polled by Oliver Wyman — those who spent less than 40,000 yuan this year — 16% expected to increase their luxury spending, while some 30% considered cutting back.
Big spenders — people who spent more than 40,000 yuan — remained more resilient and positive.
©2023 Bloomberg L.P.
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