Economy

Coronavirus The economic cost is rising in China and beyond

Published

5 years ago

February 5, 2020

The human cost of the coronavirus outbreak is climbing across China and beyond. The economic cost is also mounting, mainly, but not only, in China.

That damage is, for the most part, not due to the virus itself so much as efforts to prevent it spreading.

There are strict restrictions on moving out of Wuhan, where the outbreak began, a city with a population of 11 million.

The lockdown, also now extended to other parts of Hubei province, prevents business-related travel as well as the movement of goods and workers.

Fear of the virus also means many people will choose to avoid activities they think might expose them to the risk of infection.

So restaurants, cinemas, transport providers, hotels and shops are all quickly feeling the impact.

And the timing of the health crisis, during the lunar New Year break, means those industries have been particularly exposed to commercial losses.

The New Year holiday was extended for a few days by the national Chinese authorities and there have been longer extensions imposed by some provincial authorities, delaying the return to work for some businesses even longer.

Any delay resuming production and selling goods is likely to lead to cash-flow problems, especially for smaller operations.

Many companies will have to continue paying bills, including employees’ pay.

And for manufacturers selling goods abroad, there may be some issues with buyers becoming more reluctant to buy from China.

Herbert Wun, who owns Wing Sang Electrical, which makes products such as hair-straighteners and blow-dryers in Guangdong province, told BBC News, many companies would not have much slack to take this kind of impact, coming, as it did, on top of the US-China trade war.

And the epidemic “will add to the pressure on customers trying to shift their supply chain away from China”.

The impact is not confined to China.

International retailers have closed operations in China – the furniture seller Ikea and the coffee shop chain Starbucks, for example.

Several overseas airlines have stopped flights to China and international hotel chains have been offering refunds.

And beyond that, there is growing concern about integrated international supply chains.

China has a much bigger role in these networks than it did at the time of the last major health problem that emerged from the country – the severe acute respiratory syndrome (Sars) virus 17 years ago.

Hyundai, of South Korea, has suspended its car production because of problems with the supply of parts from its operation in China – an early warning sign of possible extensive disruption ahead.

China is an important supplier for the global motor industry and the electronics sector.

Many mobile phones and computers are made in China or at least have components manufactured there.

Financial markets have also felt the effect of the health crisis.

Stock markets around the world are lower than they were two weeks ago. China’s market fell 8% on the first day of trading after the holiday.

There has been a particularly marked impact on the prices of industrial commodities, as China is such an important buyer.

Crude oil hit its lowest level in more than a year.

It has dropped by about 15% in the past two weeks, reflecting declining demand from China – underlined by reports the country’s leading refiner, Sinopec, is cutting back.

A group of oil exporting nations is considering production cuts in an effort to reverse the price fall.

Copper is also cheaper – by about 13% over the past two weeks.

It is an important material for the construction industry, which is also sure to be affected in China.

Many of the suppliers of these commodities are emerging and developing economies.

It is early days to attempt to quantify the likely economic effects.

Much will depend on how well the Chinese authorities are able to contain the virus.

But some forecasters have made rather tentative efforts to put some numbers on the impact.

One example is the consultancy Oxford Economics which predicts the Chinese economy will grow less than 4% in the first quarter of 2020 from a year earlier.

For the full year, the forecast is average growth of 5.6%.

For both figures, the previous, pre-virus forecast was 6%.

It also expects the global economy to grow slightly less – by 0.2 percentage points – than it would have done otherwise.

But Oxford Economic says this is all based on an assumption the “worst case scenario” will be avoided. So there is a risk of the economic damage turning out to be more severe.

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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

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.

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