Economy

Justin Trudeau warns that Canada’s economy is taking a hit from spread of coronavirus

Published

5 years ago

March 4, 2020

OTTAWA—The Bank of Canada slashed a key interest rate Wednesday in a bid to blunt the economic impact of the spread of COVID-19 even as Prime Minister Justin Trudeau warned that a slowdown is already taking hold.

“We are currently seeing an impact on the global economy,” Trudeau said Wednesday, citing disrupted supply chains because of the virus’ impact in China and a downturn in travel and tourism.

“We’re seeing a slowdown,” the prime minister said during a visit to Saint-Jérôme, Que.

Federal Finance Minister Bill Morneau has said the government is looking at contingency measures to support the economy but that was too soon to say whether such steps will be needed.

But Trudeau on Wednesday suggested that an economic hit is inevitable, noting that some industries are already facing “challenging situations.” He pledged that Ottawa would work “in concert” with companies side-swiped by the impact.

“We’re continuing to work extremely hard to counter the impacts on our economy that the virus will be bringing,” he said.

As part of its response, the government announced a new cabinet committee to oversee its response to the virus, including the health and economic impacts. The committee will be chaired by Deputy Prime Minister Chrystia Freeland and includes Public Safety Minister Bill Blair, Health Minister Patty Hajdu, Morneau and Melanie Joly, whose economic development portfolio includes tourism.

The news came the same day the Bank of Canada lowered its target for the overnight rate by 50 basis points to 1.25 per cent and said it’s prepared to take further action “if required.” That matches Tuesday’s rate cut by the U.S. Federal Reserve.

Explaining its decision, the bank said that while Canada’s economy has been operating close to its potential, the virus is a “negative shock” to the economic outlook.

“Business activity in some regions has fallen sharply and supply chains have been disrupted. This has pulled down commodity prices and the Canadian dollar has depreciated,” the bank said.

“It is likely that as the virus spreads, business and consumer confidence will deteriorate, further depressing activity,” it said.

Avery Shenfeld, managing director and chief economist of CIBC Capital Markets, said that some impacts are already being felt, such as depressed commodity prices. But Shenfeld expects that consumers and businesses will become more cautious in their spending given the uncertainty, one likely factor in the Wednesday’s rate decision.

“The Bank of Canada is clearly judging that it’s coming and coming soon,” he said of the possible spending slowdown.

With new cases being reported in the United States and European countries working to contain the virus, Shenfeld cautioned that policy makers simply can’t predict how much further it will spread, making it impossible to predict the economic effects.

“Nobody knows, incuding the Bank of Canada but it’s already clear it’s a material hit to growth and warranted an attempt to provide some offset to the Canadian economy,” he said in an interview.

The rate cut is not a cure-all for the looming economic clouds but will help boost confidence and encourage spending, he said.

“It’s not a vaccine and it’s not a medication that is going to cure people who are ill. Nor will it get people out of quarantine,” Shenfeld said.

“But those people who are not quarantined or in cities that aren’t as affected by the disease will be encouraged to spend a little more and we need all of that,” he said.

The Bank of Canada noted that the impact of the virus only adds to other factors that were already weighing on the Canadian economy, such as the rail line blockades that halted freight shipments and ongoing strikes by Ontario teachers.

“In light of all these developments, the outlook is clearly weaker now than it was in January,” the bank said.

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Economy

Minimum wage to hire higher-paid temporary foreign workers set to increase

Published

3 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

7 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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