Economy

Canadian economy to get ‘back on its feet’ next year, Deloitte Canada says

Published

1 year ago

September 28, 2023

Canada’s near-term economic struggles will ease next year when growth returns and the Bank of Canada begins cutting its key lending rate, a new forecast from Deloitte Canada said.

A better-than-expected U.S. outlook and continued population growth here will offset some of the downward pressure from high household debt, soaring interest payments and stubbornly persistent inflation, the company said in its latest economic outlook report, released Thursday.

“We do have an economy getting back on its feet in the first half of next year,” said Dawn Desjardins, chief economist at Deloitte Canada, who co-authored the report.

“The recovery will pick up steam in the second half of 2024 because it’s during the time we anticipate the Bank of Canada will be able to pivot from having high interest rates we’re living with today,” she said.

The report estimates GDP will rise 1% this year and 0.9% next year. Deloitte Canada had earlier predicted GDP would contract 0.9% in 2023.

The next two quarters for the Canadian economy, however, are going to be tough, Desjardins said.

“Canada’s economy has entered a rough patch and the growth is likely to be negligible,” she said. “In fact, we have a few negative quarters in the forecast.”

The slowdown results from the months-long crackdown on high inflation by the Bank of Canada, pushing household debt and interest payments higher, which the Deloitte economist expects will continue in the near term.

Desjardins said a third of Canadian households have a mortgage, adding that an increasing number of them are moving to refinance their property as they struggle to keep up with monthly mortgage payments — a trend expected to continue going forward.

“We do think the housing market will continue to be relatively sluggish [in the near term],” Desjardins said, which would affect other sectors as well.

“When that happens, people are not buying durable goods like refrigerators, stoves and washing machines they would normally purchase when they buy a new home.”

Despite the affordability and housing crises, Deloitte Canada said strengthening U.S. trade and population growth in Canada appear to be helping the country avoid a deeper recession.

Canada’s population is set to jump 2.7% this year, the only other time the country came close to that type of population surge was back in 1971 when it rose 2.2%.

Economists suggest population growth would outpace job gains in the coming months, with the unemployment rate expected to hit 5.9% early next year. A pullback in hiring would drive unemployment and, in turn, slow down consumer spending.

Canada’s record-high population surge also pushed Deloitte to recalibrate its expectations for consumer spending. The report suggests real consumption on a per capita basis dropped 1.5% over the last year, more in line with falling real wages and high interest rates.

“We have finally seen evidence that consumers are taking a step back,” Desjardins said. “The bank’s rate increases are stressing some budgets.”

The report suggests consumer spending this year will grow by 2% but slow to a pace of 1.2% in 2024.

Deloitte Canada estimates the overnight interest rate would fall to a neutral level of 3% by mid-2025.

For the business sector, the report says the investment outlook remains muted in the near term as cost pressures and economic uncertainties hamper confidence among Canadians.

Source link

Economy

Minimum wage to hire higher-paid temporary foreign workers set to increase

Published

4 days ago

October 21, 2024

Anne Joseph

OTTAWA – The federal government is expected to boost the minimum hourly wage that must be paid to temporary foreign workers in the high-wage stream as a way to encourage employers to hire more Canadian staff.

Under the current program’s high-wage labour market impact assessment (LMIA) stream, an employer must pay at least the median income in their province to qualify for a permit. A government official, who The Canadian Press is not naming because they are not authorized to speak publicly about the change, said Employment Minister Randy Boissonnault will announce Tuesday that the threshold will increase to 20 per cent above the provincial median hourly wage.

The change is scheduled to come into force on Nov. 8.

As with previous changes to the Temporary Foreign Worker program, the government’s goal is to encourage employers to hire more Canadian workers. The Liberal government has faced criticism for increasing the number of temporary residents allowed into Canada, which many have linked to housing shortages and a higher cost of living.

The program has also come under fire for allegations of mistreatment of workers.

A LMIA is required for an employer to hire a temporary foreign worker, and is used to demonstrate there aren’t enough Canadian workers to fill the positions they are filling.

In Ontario, the median hourly wage is $28.39 for the high-wage bracket, so once the change takes effect an employer will need to pay at least $34.07 per hour.

The government official estimates this change will affect up to 34,000 workers under the LMIA high-wage stream. Existing work permits will not be affected, but the official said the planned change will affect their renewals.

According to public data from Immigration, Refugees and Citizenship Canada, 183,820 temporary foreign worker permits became effective in 2023. That was up from 98,025 in 2019 — an 88 per cent increase.

The upcoming change is the latest in a series of moves to tighten eligibility rules in order to limit temporary residents, including international students and foreign workers. Those changes include imposing caps on the percentage of low-wage foreign workers in some sectors and ending permits in metropolitan areas with high unemployment rates.

Temporary foreign workers in the agriculture sector are not affected by past rule changes.

This report by The Canadian Press was first published Oct. 21, 2024.

— With files from Nojoud Al Mallees

Source link

Economy

PBO projects deficit exceeded Liberals’ $40B pledge, economy to rebound in 2025

Published

1 week ago

October 17, 2024

Anne Joseph

OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.

However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.

The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.

Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.

The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.

The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.

This report by The Canadian Press was first published Oct. 17, 2024.

Source link

Economy

Statistics Canada says levels of food insecurity rose in 2022

Published

1 week ago

October 16, 2024

Anne Joseph

OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.

In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.

The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.

Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.

In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.

It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.

This report by The Canadian Press was first published Oct 16, 2024.

Source link