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Economy

Diane Francis: Canada must follow Germany's path to reopening the economy – Financial Post

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It’s no coincidence that the first large Western democracy to contain the spread of COVID-19, and the first to prepare to reopen its economy, is Germany, whose leader, Chancellor Angela Merkel, is a trained scientist.

Likewise, the most successful Asian democracy to contain the spread, and never have to lock down its economy, is Taiwan, whose vice-president, Chen Chien-jen, is an epidemiologist and esteemed scientific researcher.

How both coped well with this pandemic highlights the fact that scientific credentials, along with economic ones, should be key criteria in selecting leaders and cabinet ministers in the future. This is not because pandemics are going to come with increasing frequency. This is because those with science and economic backgrounds can evaluate complex data and make better decisions than those elected because of their looks, tweets, speeches or name recognition.

Germany, by the way, should have had a catastrophic crisis on its hands because it is densely populated and surrounded by countries with soaring death rates. But its science-based policies helped it navigate the crisis better than most. Its death rate of 54 deaths per million is dramatically lower than nearby countries such as Spain (437 per million), Italy (384), France (296) and the United Kingdom (237).

For starters, Germans have not been as unruly as residents of many other European countries, or the United States. This is because they are disciplined and efficient: German financial assistance to workers and business was almost immediate. Besides that, its public was mollified because, throughout this pandemic, Merkel has made a series of calm and reasoned public addresses to explain the scientific issues and lay out the next steps, along with the reasons why the government is taking those steps.

There were no televised outbursts involving magical thinking, no playing the blame game, no upstaging other levels of government or engaging in baseless forecasting. Germans were given the facts from the start as to how challenging this would be.

Merkel quickly imposed stringent two-person limits on gatherings, along with social distancing requirements and lockdowns. She explained that the government’s priorities were testing and the tracing of “every infection chain,” to contain the spread.

In the beginning, Germany was hit just as hard as other European countries, but its health-care system has fared much better. It was, and is, self-sufficient in terms of medical devices, test kits and equipment production, and had a surplus of ICU beds and other specialized health-care services at the ready.

Its institutions and politicians were temperate. There was no competition for supplies and — due to Merkel’s science-based policymaking — the country ramped-up testing faster than and to a greater scale than most. Now about 120,000 tests are administered daily among a population of 83 million, and the goal is to do even more.

Results have been rapid and flawless, thanks to a network of laboratories that, among other innovations, developed the first test in the world for this coronavirus.

Now Germany is so far advanced in controlling the virus that it is cautiously rolling out a system of issuing so-called “immunity cards” for those who have been shown to have developed antibodies to the disease, which will allow them to work, travel and socialize, thus allowing the country to gradually reopen its economy. Such a system will be the key to finding a safe and sustainable way to kickstart economic activity in Canada and elsewhere.

On this side of the pond, 16 U.S. states have formed three coalitions to examine a staged re-opening of their economies. This will be based, as California Gov. Gavin Newsom said, “on science and public health, not politics.”

Canada’s provinces should adopt the German model: prioritize antibody testing and immune certification as a means of safely reopening their economies. Canada is not a country with a sizeable scientific research base, as Germany is, but our health-care systems are gigantic, science-based, not-for-profit organizations that work closely with their provincial governments. They must sign off on how to lift restrictions, in order to protect their workers and avoid a second wave of contagion.

Financial Post

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Economy

Canada’s unemployment rate holds steady at 6.5% in October, economy adds 15,000 jobs

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OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.

Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.

Business, building and support services saw the largest gain in employment.

Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.

Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.

Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.

Friday’s report also shed some light on the financial health of households.

According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.

That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.

People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.

That compares with just under a quarter of those living in an owned home by a household member.

Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.

That compares with about three in 10 more established immigrants and one in four of people born in Canada.

This report by The Canadian Press was first published Nov. 8, 2024.

The Canadian Press. All rights reserved.

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Economy

Health-care spending expected to outpace economy and reach $372 billion in 2024: CIHI

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The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.

The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.

CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.

This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.

While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.

Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.

The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.

This report by The Canadian Press was first published Nov. 7, 2024.

Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.

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Trump’s victory sparks concerns over ripple effect on Canadian economy

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As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.

Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.

A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.

More than 77 per cent of Canadian exports go to the U.S.

Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.

“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.

“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”

American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.

It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.

“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.

“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”

A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.

Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.

“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.

Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.

With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”

“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.

“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”

This report by The Canadian Press was first published Nov. 6, 2024.

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