Economy
Latest inflation numbers could shift focus of campaign to economy, federal debt – 95.7 News
OTTAWA — The election spotlight could shift today to Canada’s pandemic-ravaged economy and debt-laden federal finances as Statistics Canada reveals its consumer price index for July.
The annual pace of inflation was 3.1 per cent in June, down from 3.6 per cent in May when the consumer price index posted its largest yearly increase in a decade.
The inflation rate has exceeded the Bank of Canada’s target of two per cent since April and some economists expect it to creep as high as 3.9 per cent in the fall.
Bank of Canada governor Tiff Macklem has argued that price increases are temporary — the result of supply chain disruptions during COVID-19 lockdowns — and that allowing inflation to remain temporarily high will help the economy rebound from the pandemic-induced recession.
He has said Canadians can be confident that the central bank will keep the cost of living under control as the economy reopens, even as it maintains its record-low benchmark interest rate of 0.25 per cent.
However, some economists believe inflation could spike higher and last longer than Macklem suggests.
And persistently high inflation would put pressure on the bank to increase interest rates, which would make it exponentially more costly for the federal government to carry its staggering debt load.
The 2021 budget forecast that the debt will double to $1.4 trillion by 2026.
Conservatives have blamed the Liberal government for “out-of-control” inflation and accused the Bank of Canada of being in cahoots to enable the Liberals to finance their massive pandemic relief spending.
Conservative MP Pierre Poilievre refers to it as an “inflation tax that transfers money from the have-nots to the have-yachts,” pushing up the price of necessities like food and fuel and sending housing prices into the stratosphere, beyond the reach of working-class Canadians.
This report by The Canadian Press was first published Aug. 18, 2021.
The Canadian Press
Economy
China Wants Everyone to Trade In Their Old Cars, Fridges to Help Save Its Economy
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China’s world-beating electric vehicle industry, at the heart of growing trade tensions with the US and Europe, is set to receive a big boost from the government’s latest effort to accelerate growth.
That’s one takeaway from what Beijing has revealed about its plan for incentives that will encourage Chinese businesses and households to adopt cleaner technologies. It’s widely expected to be one of this year’s main stimulus programs, though question-marks remain — including how much the government will spend.
Economy
German Business Outlook Hits One-Year High as Economy Heals
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German business sentiment improved to its highest level in a year — reinforcing recent signs that Europe’s largest economy is exiting two years of struggles.
An expectations gauge by the Ifo institute rose to 89.9. in April from a revised 87.7 the previous month. That exceeds the 88.9 median forecast in a Bloomberg survey. A measure of current conditions also advanced.
“Sentiment has improved at companies in Germany,” Ifo President Clemens Fuest said. “Companies were more satisfied with their current business. Their expectations also brightened. The economy is stabilizing, especially thanks to service providers.”
A stronger global economy and the prospect of looser monetary policy in the euro zone are helping drag Germany out of the malaise that set in following Russia’s attack on Ukraine. European Central Bank President Christine Lagarde said last week that the country may have “turned the corner,” while Chancellor Olaf Scholz has also expressed optimism, citing record employment and retreating inflation.
There’s been a particular shift in the data in recent weeks, with the Bundesbank now estimating that output rose in the first quarter, having only a month ago foreseen a contraction that would have ushered in a first recession since the pandemic.
Even so, the start of the year “didn’t go great,” according to Fuest.
“What we’re seeing at the moment confirms the forecasts, which are saying that growth will be weak in Germany, but at least it won’t be negative,” he told Bloomberg Television. “So this is the stabilization we expected. It’s not a complete recovery. But at least it’s a start.”
Monthly purchasing managers’ surveys for April brought more cheer this week as Germany returned to expansion for the first time since June 2023. Weak spots remain, however — notably in industry, which is still mired in a slump that’s being offset by a surge in services activity.
“We see an improving worldwide economy,” Fuest said. “But this doesn’t seem to reach German manufacturing, which is puzzling in a way.”
Germany, which was the only Group of Seven economy to shrink last year and has been weighing on the wider region, helped private-sector output in the 20-nation euro area strengthen this month, S&P Global said.
–With assistance from Joel Rinneby, Kristian Siedenburg and Francine Lacqua.
(Updates with more comments from Fuest starting in sixth paragraph.)
Economy
Parallel economy: How Russia is defying the West’s boycott
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When Moscow resident Zoya, 62, was planning a trip to Italy to visit her daughter last August, she saw the perfect opportunity to buy the Apple Watch she had long dreamed of owning.
Officially, Apple does not sell its products in Russia.
The California-based tech giant was one of the first companies to announce it would exit the country in response to Russian President Vladimir Putin’s full-scale invasion of Ukraine on February 24, 2022.
But the week before her trip, Zoya made a surprise discovery while browsing Yandex.Market, one of several Russian answers to Amazon, where she regularly shops.
Not only was the Apple Watch available for sale on the website, it was cheaper than in Italy.
Zoya bought the watch without a moment’s delay.
The serial code on the watch that was delivered to her home confirmed that it was manufactured by Apple in 2022 and intended for sale in the United States.
“In the store, they explained to me that these are genuine Apple products entering Russia through parallel imports,” Zoya, who asked to be only referred to by her first name, told Al Jazeera.
“I thought it was much easier to buy online than searching for a store in an unfamiliar country.”
Nearly 1,400 companies, including many of the most internationally recognisable brands, have since February 2022 announced that they would cease or dial back their operations in Russia in protest of Moscow’s military aggression against Ukraine.
But two years after the invasion, many of these companies’ products are still widely sold in Russia, in many cases in violation of Western-led sanctions, a months-long investigation by Al Jazeera has found.
Aided by the Russian government’s legalisation of parallel imports, Russian businesses have established a network of alternative supply chains to import restricted goods through third countries.
The companies that make the products have been either unwilling or unable to clamp down on these unofficial distribution networks.
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