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Coronavirus Is Now Expected To Curb Global Economic Growth By 0.3% In 2020 – Forbes

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Even if the coronavirus mostly impacts first quarter GDP, that will still lower overall global … [+] economic growth in 2020.

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Topline: As investors around the world continue to worry about the impact of the fast-spreading coronavirus outbreak on China’s and the world’s economy, experts are forecasting that global economic growth in 2020 will be reduced by 0.2% to 0.3%, while in the U.S. first quarter growth could take a 0.2% to 0.4% hit.

  • The coronavirus, which has now infected more than 43,100 people worldwide and killed 1,018—surpassing the level of severity seen in the 2002-2003 SARS outbreak, will undoubtedly have a substantial effect on China’s GDP growth, both in the first quarter and throughout 2020.
  • Taking the outbreak into consideration, estimates for China’s first quarter GDP now range from 0% to around 5.5%—down from the 5.9% current annual projected growth rate. The SARS outbreak, by comparison, knocked 2% off China’s GDP yearly growth and was estimated to have cost the global economy up to 0.3%, according to Time.
  • With the Chinese economy today accounting for about 17% of global GDP, there is rising concern over what impact that could have on the global economy—as governments and companies around the world implement a large number of coronavirus-related work stoppages and travel restrictions.
  • Moody’s Analytics and Barclays both estimate that the coronavirus is expected to lower global GDP by 0.3% in 2020, while Oxford Economics forecasts a 0.2% reduction for the year.
  • Back in the U.S., White House economists still only see a limited economic impact from the outbreak, with an expected 0.2% reduction in first quarter economic growth, the Washington Post reports. JPMorgan has slashed its U.S. first quarter GDP forecast by 0.25%, Goldman Sachs by 0.40% and Moody’s by 0.45%.
  • In his semiannual testimony before Congress on Tuesday, Federal Reserve Chairman Jerome Powell addressed these concerns, saying that the central bank is “closely monitoring” whether the coronavirus will hurt the U.S. economy—though he also added that “it’s just too early to say.”

What to watch for: Experts have also warned that the impact from the coronavirus could be worse than the 0.2% or 0.3% hit that most are predicting, depending on how severe the disease continues to be. According to a study by the World Bank, a more severe pandemic could cause economic losses amounting to nearly 5% of global GDP—more than $3 trillion, while a weaker pandemic, like the 2009 swine flu, could wipe out 0.5% of global GDP. While Federal Reserve Vice Chair Richard Clarida recently called the virus a “wild card,” he also said that there is unlikely to be any lasting damage to the U.S. economy if it gets resolved within one or two quarters, according to the Washington Post. White House economic adviser Larry Kudlow, for instance, has said it will probably only have a “minimal” impact on the U.S. economy. As historical economic data shows, a slowdown caused by a temporary crisis usually precedes an uptick in stocks as the market eventually stabilizes.

Crucial quote: “I think we know there will be effects on China through some part of the first half of the year and China’s close neighbors and major trading partners,” Powell said during his testimony.

Tangent: While the coronavirus outbreak’s effect on the U.S. economy remains to be seen, Commerce Secretary Wilbur Ross recently claimed that it would actually be good for American jobs, and “will help” persuade companies to move operations back to North America. Billionaire investor Ray Dalio, who Forbes estimates is worth $18.7 billion, recently said that the impact of the coronavirus outbreak on markets has likely been exaggerated, and will be short-lived: “I would expect more of a rebound.”

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Topline: As investors around the world continue to worry about the impact of the fast-spreading coronavirus outbreak on China’s and the world’s economy, experts are forecasting that global economic growth in 2020 will be reduced by 0.2% to 0.3%, while in the U.S. first quarter growth could take a 0.2% to 0.4% hit.

  • The coronavirus, which has now infected more than 43,100 people worldwide and killed 1,018—surpassing the level of severity seen in the 2002-2003 SARS outbreak, will undoubtedly have a substantial effect on China’s GDP growth, both in the first quarter and throughout 2020.
  • Taking the outbreak into consideration, estimates for China’s first quarter GDP now range from 0% to around 5.5%—down from the 5.9% current annual projected growth rate. The SARS outbreak, by comparison, knocked 2% off China’s GDP yearly growth and was estimated to have cost the global economy up to 0.3%, according to Time.
  • With the Chinese economy today accounting for about 17% of global GDP, there is rising concern over what impact that could have on the global economy—as governments and companies around the world implement a large number of coronavirus-related work stoppages and travel restrictions.
  • Moody’s Analytics and Barclays both estimate that the coronavirus is expected to lower global GDP by 0.3% in 2020, while Oxford Economics forecasts a 0.2% reduction for the year.
  • Back in the U.S., White House economists still only see a limited economic impact from the outbreak, with an expected 0.2% reduction in first quarter economic growth, the Washington Post reports. JPMorgan has slashed its U.S. first quarter GDP forecast by 0.25%, Goldman Sachs by 0.40% and Moody’s by 0.45%.
  • In his semiannual testimony before Congress on Tuesday, Federal Reserve Chairman Jerome Powell addressed these concerns, saying that the central bank is “closely monitoring” whether the coronavirus will hurt the U.S. economy—though he also added that “it’s just too early to say.”

What to watch for: Experts have also warned that the impact from the coronavirus could be worse than the 0.2% or 0.3% hit that most are predicting, depending on how severe the disease continues to be. According to a study by the World Bank, a more severe pandemic could cause economic losses amounting to nearly 5% of global GDP—more than $3 trillion, while a weaker pandemic, like the 2009 swine flu, could wipe out 0.5% of global GDP. While Federal Reserve Vice Chair Richard Clarida recently called the virus a “wild card,” he also said that there is unlikely to be any lasting damage to the U.S. economy if it gets resolved within one or two quarters, according to the Washington Post. White House economic adviser Larry Kudlow, for instance, has said it will probably only have a “minimal” impact on the U.S. economy. As historical economic data shows, a slowdown caused by a temporary crisis usually precedes an uptick in stocks as the market eventually stabilizes.

Crucial quote: “I think we know there will be effects on China through some part of the first half of the year and China’s close neighbors and major trading partners,” Powell said during his testimony.

Tangent: While the coronavirus outbreak’s effect on the U.S. economy remains to be seen, Commerce Secretary Wilbur Ross recently claimed that it would actually be good for American jobs, and “will help” persuade companies to move operations back to North America. Billionaire investor Ray Dalio, who Forbes estimates is worth $18.7 billion, recently said that the impact of the coronavirus outbreak on markets has likely been exaggerated, and will be short-lived: “I would expect more of a rebound.”

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

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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

The Canadian Press. All rights reserved.

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

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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.

The Canadian Press. All rights reserved.

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Statistics Canada says levels of food insecurity rose in 2022

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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.

The Canadian Press. All rights reserved.

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