Economy

IMF says Russia's war in Ukraine will 'severely set back' global economy – CNN

Published

3 years ago

April 19, 2022

London (CNN Business)The International Monetary Fund has slashed its expectations for global economic growth over the next two years because of Russia’s invasion of Ukraine, comparing the ripple effects from the conflict to an “earthquake.”

“The economic effects of the war are spreading far and wide,” the organization said in its latest outlook, published Tuesday.

The IMF now expects the world economy to expand by 3.6% in both 2022 and 2023, a sharp deceleration from growth of 6.1% in 2021. The new forecasts reflect downgrades of 0.8 and 0.2 percentage points, respectively, from its January forecast.

The World Bank also slashed its global growth forecast this week. It now expects the world economy to expand by 3.2% in 2022.

The IMF outlook assumes that the war remains confined to Ukraine, that further sanctions on Russia don’t target its huge energy sector and the effects of the pandemic continue to fade.

Unsurprisingly, the conflict will hit Ukraine and Russia the hardest. The IMF expects Ukraine’s economy to shrink 35% this year, while the West’s efforts to punish Russia are poised to cause its economy to contract by 8.5%.

But because the war has caused a spike in the price of energy and other commodities, worsening supply chain problems and feeding expectations for more persistent inflation, its effects will be felt almost everywhere.

“The war will severely set back the global recovery, slowing growth and increasing inflation even further,” the IMF said, emphasizing that the world economy had not fully recovered from the coronavirus pandemic when Russia invaded Ukraine in late February.

In Europe, which relies heavily on Russia to meet its energy needs, growth is now expected to slow to 2.8% in 2022, a downgrade of 1.1 percentage points versus January.

The United States is comparatively insulated. Yet weakness among its trading partners, as well as the Federal Reserve’s plans to quickly pull back pandemic-era support for the economy and raise interest rates, are weighing on the outlook. The IMF projects US growth of 3.7% in 2022 and 2.3% in 2023, down 0.3 percentage points since its last forecast.

Storm clouds are also gathering over China, which the IMF now expects to log growth of 4.4% in 2022, well below Beijing’s official target of about 5.5%. The world’s second biggest economy is hampered by lockdowns aimed at stopping the spread of Covid-19, fallout from the war in Ukraine and problems in its property sector.

While the report observes that “global economic prospects have worsened significantly” since the start of the year, it does not predict a recession, which the IMF typically calls when growth falls to 2.5% or lower.

But the IMF also notes uncertainty “well beyond the normal range” surrounding its projections because of the unprecedented nature of the shock. And the risks of an even greater slowdown, combined with persistently high inflation, are climbing.

Goldman Sachs this week put the likelihood of a US recession at 15% in the next 12 months and 35% within the next 24 months. Japanese investment bank Nomura said Monday that the chances are rising that China falls into a recession this spring.

Much could depend on Russian President Vladimir Putin’s next move. If supplies of Russian natural gas to Germany were suddenly cut off, Europe’s biggest economy would lose a shocking $238 billion in economic output over the next two years, the country’s top forecasters have said.

Europe could also go further in sanctioning Russian energy. French Finance Minister Bruno Le Maire said Tuesday that an embargo on Russian oil at a European Union level was in the works, adding that France’s President Emmanuel Macron wants such a move.

“The reason that we are not there yet isn’t because France does not wish it,” Le Maire told Europe 1 radio. “It is because there are still certain European partners who are hesitant.”

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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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