Alberta’s economy is expected to suffer an 11.3 per cent decline in 2020, the worst in the country, according to a new Conference Board of Canada report that projects the COVID-19 induced recession will hit Canada nearly twice as hard as the group initially thought.
The last time that the board wrote an outlook report was near the height of the pandemic in April when the country was still shut down and economists’ forecasts were clouded by uncertainty. The organization estimated that Canada was heading for a 4.3 per cent GDP contraction by the end of 2020. Four months later, it’s clear the damage will be much worse than initially thought as the board now says Canada is heading for an 8.2 per cent GDP decline by the end of 2020.
“Initially, we thought this would last from March to perhaps June and July and in the second half of the year, the economy would be fully back to operating normally — this is not the case at all,” said Conference Board of Canada chief economist Pedro Antunes after publishing his latest projections Monday. “What we’ve come to realize is the economy will be operating well below (pre-pandemic) levels.”
The board’s province-to-province breakdown was similarly altered. In April, it did not foresee a GDP loss for any province hitting six per cent — the projection of a 5.8 per cent drop for Alberta was the highest. The only three provinces the board expects won’t surpass that number now are Manitoba, P.E.I. and B.C.
Alberta’s deeper decline is due to the “double whammy” of the lockdown and the crumbling of oil prices. West Texas Intermediate prices were hovering above US$50 in February before falling deep into negative territory. Crude prices have rebounded since but are still trading only around US$42.
“The outlook for oil prices over the next two years is quite pessimistic because of the impact on transportation which is a big user of oil,” Antunes said. “That affects profits and royalties the government will have to forgo, but the biggest impact … is the capital investment. Firms have cut down to the bare bones.”
Business investment is not expected to pick up again until Spring 2021, while a stark decline in household spending won’t be corrected until 2022.
Other provinces that rely heavily on the oil-and-gas sector, namely Newfoundland and Saskatchewan, are in a similar position and the board expects them to lose 7.1 per cent and 8.6 per cent of GDP respectively.
The board initially expected the downturns in Ontario and Quebec to result in GDP contractions of 3.2 per cent and 3.8 per cent, but those projections have now been revised to 7.6 per cent and 7.2 per cent.
Quebec was the worst-hit province in terms of the total number of COVID-19 cases and deaths, but the damage to its economy would have been worse if not for the government’s decision to begin the reopening process earlier than others, the report said.
The province’s crucial aerospace industry, in particular, may have a long wait ahead before it can fully recover. Air travel, the report said, likely will not return to normal levels until late 2021 or 2022.
For Ontario, it’s the automotive industry that’s troubled. The report estimates that auto sales plunged by close to 60 per cent this year due to a drop off in exports to the U.S. The province’s recovery will continue to be tied to the U.S. and its ability to keep cases under control. If it cannot do so, Americans won’t exactly be flocking to car dealerships, the report said.
“Even with the rebound starting in the third quarter … it will take until the end of next year for the economy to return to its pre-pandemic level of output,” the report said.
Copyright Postmedia Network Inc., 2020
Report: Women, diversity are key to rebuilding Canada's economy – Wealth Professional
Climbing the ladder
Women and diverse groups are also facing struggles to climb the corporate ladder to senior leadership roles.
“While we are making some progress with women on corporate Boards, reported at 25.3% of directors, the study highlights this doesn’t hold true for racialized women, reported at just 1.2% of directors,” said Zabeen Hirji, Executive Advisor, Future of Work, Deloitte. “White women out-numbering racialized women on corporate boards in Toronto by 12 to 1. The talent is there, it is policies and practices that need to evolve. We need to cast a wider net.”
The challenges are particularly evident in science and technology sectors (STEM).
Occupations within some of the high-growth and high-income sectors reveal the disparity of women trying to advance in STEM fields, generally filling lower-level jobs compared to their higher-level male counterparts.
However, women have made inroads into highly paid professions such as medicine and law.
Gautam Adani debunks GDP rhetoric, says India will be 2nd largest economy by 2050 – Deccan Herald
Billionaire Gautam Adani has debunked the narrow fixation on GDP numbers, saying fundamentals are intact and India will be the second-largest economy by 2050 and has an edge over global peers in terms of business opportunities.
Speaking at the JP Morgan India Summit – Future in Focus, the Adani Group chairman said the AatmaNirbhar Bharat programme will be a game-changer.
“I will state without any hesitation – that – in my view – over the next three decades, India is the world’s greatest business opportunity,” he said.
India’s geostrategic position and massive market size give it an edge over its global peers amid the fundamental political realignment of nations taking shape, he said adding opportunities for India are likely to accelerate on the other side of the pandemic.
“For the sake of the fans of the GDP metric, let’s look at some statistics. The global GDP in 1990 was $38 trillion. Today, 30 years later, this number is $90 trillion. Projecting for another 30 years, in 2050 the global GDP is expected to be about $170 trillion with India becoming the second-largest economy in the world,” he said.
The Indian economy shrank by a record 23.9 per cent in the April-June quarter because of the Covid-19 pandemic and the lockdown that followed. The economy is projected to contract for the first time in four decades, in the full year to March 2021.
But Adani said short-term setbacks due to a global crisis cannot be used to write off the country as its fundamentals remain intact.
“The current focus on standardised GDP predictions as against truly understanding what a nation could look like over a decade has unfortunately become one of the primary elements for measuring the health of an economy. In my view, patience and long-term planning and most importantly, an alignment with the government’s business agenda are what creates the greatest value,” he said.
Speaking of challenges holding back India, Adani said that India needs $1.5 to 2 trillion of capital over the next decade but despite key structural reforms such as the National Investment and Infrastructure Fund and Credit Enhancement Fund, capital structure challenges, and lack of empowered and independent regulators remain bottlenecks to nation-building and investment opportunities.
The first generation entrepreneur, who built India’s biggest infrastructure group with interests spanning from seaports to airports and energy, coaxed the audience to look at opportunities through his ‘optimist’ lenses.
“As an entrepreneur, I am an optimist, and therefore the lenses through which I see opportunities may be different than some of yours. I recognise that the view that you cannot build a long-term future on short-term thinking, may not be in alignment with the objectives of certain priorities of the investment community,” he said.
He told the forum to stop viewing all nations through old Western growth metrics.
“Democracy cannot take a cookie-cutter approach and we should accept that different nations will have their own flavour of democracy and capitalism.”
Stating that the AatmaNirbhar Bharat or self-reliant India programme will be a game-changer, he said India building a crumbling supply chain infrastructure that stood exposed to Covid-19, as also a strong head start in digital transformation will help re-build the economy.
India's central bank to keep rates on hold, provide economic forecasts – The Journal Pioneer
By Swati Bhat
MUMBAI (Reuters) – The Reserve Bank of India is expected to keep key rates unchanged this week, but may for the first time since February provide guidance on how the economy is performing amid the coronavirus pandemic.
All 66 respondents in a Reuters poll expect the repo rate to remain unchanged at 4.0% after its policy review on Thursday, and a large majority see no cuts until the January-March quarter. The RBI will then likely stay on hold until the end of 2021.
The central bank must manage high retail inflation while keeping policy accommodative to support an economy which nosedived 23.9% last quarter, the weakest performance on record.
It has so far slashed rates by 115 basis points in response to the COVID-19 pandemic since late March.
“India’s inflation-constrained central bank is unlikely to deliver a rate cut, and we expect all policy rates to stay unchanged,” said Rahul Bajoria, economist with Barclays adding that the RBI will however provide economic projections.
India is gradually reopening its economy from a lockdown but economic activity remains depressed as coronavirus cases top six million, the second-highest globally.
The South Asian country was already facing a cyclical downturn before the pandemic struck and is now expected to mark its first full-year contraction since 1979 this year as millions are left unemployed in the world’s second-most populous country.
The RBI has so far refrained from providing any forecasts on growth or inflation due to the heightened uncertainty and risk of projections having to be revised frequently.
However, the central bank is required by law to provide economic forecasts once every six months.
“Data projections from the central bank will be critical, as it would lay out the RBI’s assessment of the extent of the current slowdown and the medium-term implications of the current crisis,” Bajoria said.
The RBI has maintained that it sees the current rise in inflation as transitional and expects to see prices come down, giving it room to reduce rates to support growth.
August inflation, at 6.69%, held above the top end of the RBI’s medium-term target range of 2-6% for the fifth consecutive month amid supply disruptions.
(Editing by Jacqueline Wong)
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