Economy

Charting the Global Economy: War Driving Inflation, Growth Risks – Financial Post

Published

3 years ago

February 26, 2022

Harry Miller

Bloomberg News

Vince Golle and Molly Smith

Publishing date:

Feb 26, 2022 • 53 minutes ago • 3 minute read • Join the conversation

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Russia’s invasion of Ukraine is contributing to some of the highest prices ever for commodities like oil, wheat and fertilizer, plaguing a global economy already experiencing decades-high inflation.

Energy inflation in the European Union accelerated to a record last month, which looks likely to worsen as natural gas and oil prices surged this week. In the U.S., higher fuel costs could delay the peak for inflation, according to forecasts by Bloomberg Economics.

Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy:

World

Russia’s invasion of Ukraine carries huge risks for a world economy that’s yet to fully recover from the pandemic. Covid-19 has left the global economy with two key points of vulnerability — high inflation and jittery financial markets. Aftershocks from the conflict could easily worsen both.

Food inflation is already plaguing global consumers, but now the price gains could get even sharper as Russia’s attack on Ukraine threatens key shipments of some of the world’s staple crops. Ukraine and Russia together account for more than a quarter of the global trade in wheat, as well as a fifth of corn sales.

Europe is bracing for what could be an exodus of more than a million refugees after Russia launched a full-scale attack on Ukraine, as officials say any initial strain will be borne by member states on the European Union’s eastern frontier.

U.S.

In the U.S., more expensive gasoline and moderate financial tightening would drag on growth. The country may ship more of its natural gas to Europe, raising prices at home. Consumer inflation may exceed 8% in February and end the year close to 5%, compared with the 3.3% consensus.

A month before the breakout of war in Ukraine, U.S. inflation-adjusted consumer spending advanced by more than expected. The advance underscores the resilience of American demand despite prices rising by triple the Federal Reserve’s target. The personal consumption expenditures price index, which the Fed uses for its inflation target, increased 6.1% from a year earlier, the most since 1982.

Europe

Energy inflation in the European Union accelerated to a record last month — with Belgium and the Netherlands taking the biggest blow — amid the worst supply crunch in decades.

French inflation accelerated more than expected, complicating the European Central Bank’s efforts to smoothly withdraw crisis-era stimulus amid economic disruption from Russia’s attack on Ukraine. Consumer prices in the euro area’s second largest economy rose 4.1% in February, the strongest reading in data back to 1997.

Asia

Russia’s invasion of Ukraine poses a difficult question for China: How can it support a key strategic partner when relations with the U.S. and Europe are so much more important for its economy? An important energy supplier to China, Russia has strengthened trade ties with Beijing over the past decade. However, Russia’s economic weight pales in comparison to Western nations, who are much bigger export customers for China.

South Korea is preparing to take immediate action if Russia’s invasion of Ukraine results in a disruption to energy shipments. About 17% of South Korea’s coal imports came from Russia last year, while it got 6% of its oil and 5.3% of its gas from the country, according to Korea Customs Service data.

Emerging Markets

Countries everywhere will feel the impact of commodity-price spikes, which include food staples like wheat as well as energy. Some, like Saudi Arabia and other Gulf oil exporters, might benefit. But for most emerging markets — already suffering slower recoveries — the combination of higher prices and capital outflows could deliver a major blow.

Oil’s surge has pushed crude above the break-even level for almost all the Middle East’s producers, raising the prospect of significant budget surpluses for even the weakest economies if prices remain high.

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Economy

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

Published

2 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

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Economy

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

Published

6 days 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.

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Economy

Statistics Canada says levels of food insecurity rose in 2022

Published

7 days 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.

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