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Flood disaster takes bite out of B.C. economy, sends infrastructure wake-up call – Energeticcity.ca

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“We’re sort of thinking maybe the direct impact of shutting down the highways, closing the rails, the Trans Mountain pipeline being down and then the retail impacts, we’re kind of thinking maybe three-tenths of a percentage point,” he said.

“It would shave off growth for 2021.”

He said the economic impact estimate does not forecast the repair and rebuilding costs, which the government has said will be massive. 

Finance Minister Selina Robinson said recently she will provide a cleared picture of the province’s finances in her February budget. Last month she said B.C. was heading for a strong economic recovery after a 3.4 per cent decline in 2020, but uncertainties due to the COVID-19 pandemic and the flood damage costs remain.

Earlier this month, Robinson said the province’s Economic Forecast Council predicted economic growth in B.C. of 5.3 per cent in 2021 and 4.2 per cent in 2022.

Peacock said the economic impact of the floods would have been felt more if the province was not in a period of economic rebound.

“So three-tenths of a percentage point doesn’t feel or sound like much when you are talking four per cent growth. But if we’re in our normal world of two per cent to two-and-a-half per cent growth, then three-tenths of a per cent is much more meaningful,” he said.

The closure of highways and rail lines due to flooding and limited access to port facilities in Vancouver sent alarms to government and industry to quickly repair infrastructure and keep supply chains in operation, even if it meant moving goods on different highways or rail routes, said Peacock.

“One thing that has become very clear for sure for government and policy-makers is that this has been kind of not a warning but a very clear indicator of just how dependent we are on some infrastructure and transportation connections,” he said.

The four-lane Coquihalla Highway, the major road transportation route to and from Vancouver, reopened to commercial traffic Dec. 20 after floods and slides damaged 20 sections of the highway, including seven bridges.

Officials at Vancouver’s port, the largest in Canada, said rail service is flowing smoothly again following major disruptions due to damaged rail lines.

“While the reopening of the Coquihalla Highway will provide renewed access for the movement of goods by truck throughout the Interior of B.C. and into Alberta, the majority of volumes across all sectors moving to and from the port move by rail,” said Vancouver Fraser Port Authority in a statement. “At this time, both railways serving the port are currently operating consistently between Vancouver and Kamloops.”

James Thompson, vice-president of western operations for Canadian National Railway, said access to the Vancouver port was cut off from Nov. 14 to Dec. 4 due to 58 damaged sites in the Fraser Canyon area from Ashcroft to Yale.

It took 400 employees and 110 pieces of equipment working 24 hours a day, seven days a week to repair the tracks, with the largest job being a major washout in the Fraser Canyon at Jackass Mountain, he said.

“We put 282,000 yards of rock to backfill what was taken away in the slide and storm, and to put that in approximate terms that are easy to understand, that’s approximately 25,000 18-wheeler loads of ballast rock, riprap and other materials at that one location,” said Thompson.

CN was effectively shut down from Kamloops to Vancouver, forcing the company to move some of its traffic to Prince Rupert, he said.

Thompson said the storm was a one of a kind event. But coming just months after wildfires in the same area that closed rail service, it only served as a reminder of the power of weather in the era of climate change.

“We do try and plan and build contingencies and resiliency into our network. But at the end of the day, I can’t say it any better than this: the railroad is an outdoor sport and Mother Nature makes the rules,” he said. 

This report by The Canadian Press was first published Dec. 26, 2021.

Companies in this story: (TSX:CNR)

Dirk Meissner, The Canadian Press

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Firms see increasing labor shortages and wage pressures – Bank of Canada survey

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Canadian firms see labor shortages intensifying and wage pressure increasing, with strong demand growth and supply chain constraints putting upward pressure on prices, a regular Bank of Canada survey said on Monday.

The central bank’s Business Outlook Survey Indicator reached its highest level on record in the fourth quarter, which was conducted before the Omicron coronavirus variant began spreading widely.

The data will play into the Bank of Canada’s calculations as it ponders when to raise rates. The bank, which has said it is paying close attention to wage inflation, is scheduled to make its next announcement on Jan 26.

Last October it said it could start raising rates as soon as April 2022, but some investors expect a hike this month. [BOCWATCH]

“The combination of strong demand and bottlenecks in supply is expected to put upward pressure on prices over the next year,” said the survey.

“In response to capacity pressures, most businesses across sectors and regions are set to increase investment and plan to raise wages to compete for workers and retain staff.”

Last month the central bank said slack in Canada’s economy has been substantially diminished.

Inflation expectations for the next two years continued to increase, with two-thirds of firms now expecting inflation to be above the central bank’s 1-3% control range over the next two years.

Most firms, in response to a special question, said they expected the currently elevated inflationary pressures to dissipate over time, with inflation returning to the 2% target over 1-3 years.

Canada’s annual inflation rate was at an 18-year high of 4.7% in November. The December data will be released on Wednesday, with analysts surveyed by Reuters expecting it to hit 4.8%.

The Canadian dollar was trading 0.4% higher at 1.2504 to the greenback, or 79.97 U.S. cents.

(Additional reporting by Fergal Smith in Toronto; Editing by Chizu Nomiyama)

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China's economy grows 8.1% in 2021, slows in second half – Yahoo Canada Finance

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BEIJING (AP) — Chinese leaders are under pressure to boost slumping economic growth while they try to contain coronavirus outbreaks ahead of next month’s Winter Olympics in Beijing.

The world’s second-largest economy grew by 8.1% last year, but activity fell abruptly in the second half as the ruling Communist Party forced China’s vast real estate industry to cut surging debt, official data showed Monday.

Growth sank to 4% over a year earlier in the final three months of the year, fueling expectations Beijing may need to cut interest rates or stimulate the economy with more spending on public works construction.

That slump is likely to worsen, leading to “more aggressive measures to boost growth,” Ting Lu and Jing Wang of Nomura said in a report.

On Monday, the Chinese central bank cut its interest rate for medium-term lending to commercial banks to the lowest level since early 2020, at the start of the coronavirus pandemic.

Asian stock markets ended the day mixed following the dual announcements. China’s benchmark Shanghai Composite Index gained 0.6% while the Hang Seng in Hong Kong lost 0.7%. The Nikkei 2225 in Tokyo rose 0.7%.

Lingering Chinese economic weakness has potential global repercussions, depressing demand for steel, consumer goods and other imports.

China rebounded quickly from the pandemic, but activity weakened last year as Beijing tightened controls on borrowing by real estate developers, triggering a slump in construction that supports millions of jobs. That made consumers nervous about spending and investors anxious about possible defaults by developers.

Consumer spending has suffered after authorities responded to virus outbreaks by blocking most access to cities including Tianjin, a port and manufacturing center near Beijing, and imposed travel controls in other areas.

Their “zero-COVID strategy” aims to keep the virus out of China by finding and isolating every infected person. That has helped to keep case numbers low but is depressing consumer activity and causing congestion in some ports.

The ruling party has stepped up enforcement ahead of the Feb. 4 start of the Winter Games, a prestige project. Athletes, reporters and officials at the Games are required to stay in sealed areas and avoid contact with outsiders.

Growth in consumer spending, the biggest driver of economic growth, fell to 1.7% over a year earlier in December from the previous month’s 3.9%.

“The prospect this year for consumer spending to rebound back to pre-pandemic levels has certainly dimmed,” David Chao of Invesco said in a report. “All eyes are on whether policymakers will evolve their zero-COVID pandemic policies.”

Officials have urged the public to stay where they are during the Lunar New Year holiday instead of visiting their hometowns. That will cut spending on travel, gifts and banquets during the country’s most important family holiday.

Forecasters have cut this year’s growth outlook to as low as 5% due to the debt crackdown and coronavirus.

“Downward pressure on growth will persist in 2022,” Tommy Wu of Oxford Economics said in a report.

Compared with the previous quarter, the way other major economies are measured, the Chinese economy grew 1.4% in the final three months of 2021. That was up from the previous quarter’s 0.2%.

Chinese exports, reported Friday, surged 29.9% in 2021 over the previous year despite a global shortage of semiconductors needed to make smartphones and other goods and power rationing imposed in major manufacturing areas.

Exporters benefited from reviving global demand while their foreign competitors were hampered by anti-virus controls. But economists say this year’s trade growth is likely to be weak and export volumes might shrink due to congestion at ports.

“With supply chains already stretched to capacity, last year’s boost from surging exports can’t be repeated,” Julian Evans-Pritchard of Capital Economics said in a report.

Auto sales fell for a seventh month in November, declining 9.1% from a year earlier, reflecting consumer reluctance to commit to big purchases.

Chinese leaders are trying to steer the economy to more sustainable growth based on domestic consumption instead of exports and investment and to reduce financial risk.

In mid-September, factories in some provinces were ordered to shut down to meet official targets for reducing energy use and energy intensity, or the amount used per unit of output.

One of the country’s biggest developers, Evergrande Group, is struggling to avoid defaulting on $310 billion owed to banks and bondholders. Smaller developers have collapsed or defaulted on debts after Beijing reduced the amount of borrowed money they can use.

Chinese officials have tried to reassure investors over the risks of wider problems, saying any impact on lending markets can be contained. Economists say a potential Evergrande default should have little effect on global markets.

___

National Bureau of Statistics (in Chinese): www.stats.gov.cn

Joe Mcdonald, The Associated Press

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A Moment with the Mayor: The need for economic recovery – City of Lloydminster

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I have received many questions on the state of our local economy from residents. At the root of most of the questions is a desire to know what the City is doing to help restart the economy.

Lloydminster’s economy is large and diverse, with our two major industries being oil and gas and agriculture. Both industries are greatly affected by world prices, world political conditions and agriculture is also significantly affected by global weather.

Those who have spent many years here and worked within the oil and gas sector likely don’t recall a price of oil as high as it was a few years ago. On the flip side, in the late 1990s, oil was selling for $10 a barrel, and things were tough for everyone. Today, we have seen a huge rebound for oil prices from less than $40US per barrel to today, the price hovering around $80US per barrel.

Want ads are present throughout our community’s oil and gas service companies and throughout the Western Canadian Sedimentary Basin. This is driven by a price, something set at the world level on a daily basis by the market and traders. A similar story in agriculture is that commodities are trading at record prices, such as canola and wheat. This is excellent news for producers and the farm, but again the prices are not being set by producers but by the world market and traders. Many farmers have shared with me the great news of these higher commodity prices, followed by the downside of the increased cost of inputs. Fertilizer has doubled in price from last year and is still rising. Pesticide prices are increasing rapidly, and supply shortages are all the talk.

Our economy is based on a regional trade and service centre with people travelling considerable distances to access medical professional and retail services and goods. The City’s Economic Development team continues to support local businesses by helping them deal with today’s challenges. We strive to help them grow their businesses today and into the future and look ahead and foster new business opportunities, big and small, to add to our community and surrounding area. Our economy is building and growing each and every day.

The City will continue to help lead in welcoming new businesses in all sectors of the economy. We’re well-positioned with great highway and railway access and a diverse labour pool to take advantage of the opportunities that lie ahead of us in 2022 and beyond.

Mayor Gerald S. Aalbers
City of Lloydminster

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