The spread of a new strain of coronavirus from China to at least 16 countries has implications for the global economy, analysts warn. That includes Canada, where one confirmed case and one presumptive case of the new coronavirus have been detected so far.
If the current outbreak follows the course of past health scares, it will only be a temporary bump for the Canadian economy, according to an analysis by BMO economist Sal Guatieri. But that stumble would come as domestic growth has already entered a soft patch.
Typically, global health-care worries send stock markets into sell-off mode, with prices of airlines, restaurants and hotels hit especially hard, Guatieri said in a note published on Friday. At the same time, investors pile into safer assets.
3:00 Do Canadians need to worry about coronavirus?
Do Canadians need to worry about coronavirus?
On Monday, Canada’s benchmark S&P/TSX composite index was down about 0.6 per cent in midday trading, while the Dow Jones Industrial Average and the S&P 500 were down around one per cent, erasing a significant portion of their gains for January. Companies that rely on travel and tourism suffered steep losses. Meanwhile, the prices of safe-haven assets like gold and bonds rose.
The stock declines follow equity sell-offs in Europe earlier in the day. Most markets in Asia were closed for the Lunar New Year, with Chinese authorities extending the holiday to Feb. 2 in an effort to keep as many people as possible at home to contain the outbreak.
2:12 Lunar New Year celebrations continue under coronavirus scare
Lunar New Year celebrations continue under coronavirus scare
As with previous outbreaks, the new, fast-spreading coronavirus is also rattling commodities markets. Crude oil prices dipped below US$60 (C$78) for the first time in nearly three months on Monday, as reports of more businesses being forced to shut down fuelled expectations of slowing oil demand.
The dip in commodity prices typically has knock-on effects for the currencies of countries with resource-based economies, like Canada’s, Guatieri wrote.
On Monday, the Canadian dollar was trading at 75.78 cents U.S., compared with an average of 76.10 cents U.S. on Friday, which was already a four-week low.
Comments from the Bank of Canada, which recently trimmed its 2020 economic forecast, have also been putting pressure on the loonie.
In general, global epidemics tend to slow down broader economic growth, Guatieri wrote.
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“People shop less, delay travel and stay home. Companies turn cautious and delay investments.”
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While government moves to contain the crisis and increased demand for health-care services offsets the adverse economic impacts somewhat, “the economy slows nonetheless,” Guatieri said.
In 2003, the spread of SARS shaved 0.66 percentage points off annualized economic growth between March and June that year, according to an estimate from the Bank of Canada. The outbreak caused nearly 800 deaths worldwide, 44 of which were in Canada.
6:01 Is Canada doing enough to protect Canadians from the coronavirus outbreak?
Is Canada doing enough to protect Canadians from the coronavirus outbreak?
But the economic impact of SARS and other recent epidemics has been short-lived, Guatieri said.
Stock markets were quick to bounce back once the outbreak appeared to be under control and the number of cases began to fall, with economic activity also recovering rapidly, the report said.
In Canada, the full-year impact of the SARS outbreak was a reduction of a mere 0.1 per cent of GDP, according to the Bank of Canada.
Guatieri also noted the Chinese government is taking decisive steps to control the outbreak and health care authorities have better technology and protocols in place since the SARS crisis.
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And while the new coronavirus outbreak strikes at a time when both the U.S. and Chinese economies are losing steam, economists have also been hoping for that growth slump to ease somewhat thanks to recent progress on trade negotiations with the approval of a “Phase 1” trade deal between Washington and Beijing.
The ratification of the Canada-United States-Mexico Agreement (CUSMA) is also expected to be a boost for Canada’s economy, ending the uncertainty that weighed on cross-border business as the three countries negotiated a trade agreement to replace NAFTA.
The bottom line is “it’s too soon to revise down our growth forecast” because of the latest health scare, Guatieri said.
— With files from Reuters and the Associated Press
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.
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.
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.
