In an interview with The West Block‘s Mercedes Stephenson, Morneau said part of the reason the government feels like it can respond well to what he called the “very real potential challenges” of the coronavirus spread comes from strong employment numbers and its ratio of debt to GDP.
“I think what people need to know is that, you know, we have a strong fiscal position, so we’re prepared in terms of the actual health risks, but we’ve a strong position fiscally so that we can actually take measures as needed as the facts come out,” he said.
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“We’re going to be prepared to announce them when and if that comes. The good news, again, is that we have the capacity to do that.”
Morneau also acknowledged last week that officials are changing their risk adjustment provision for the upcoming federal budget in response to COVID-19, which has caused shock waves through financial markets around the world over recent months.
But Brian DePratto, director of economics at TD Bank, urged more caution.
“I think he’s taking a relatively narrow view of the economy,” he said of Morneau’s comments.
“If you take a broader picture, we had a very soft end to last year, business investment sort of struggling to gain traction for a number of years now. Looking at recent developments – rail blockades, weather, other factors – already [it’s] a soft start to the year before we even talk about coronavirus. So I think we don’t really have a lot of growth buffer to work with here in Canada.”
DePratto noted that while Morneau is right that Canada is in a better fiscal position than many of its allies, that doesn’t mean it has much in the way of economic wiggle room. As a result, if the government wants to put out new programs to help reduce the impact of the virus, it may need to make changes elsewhere.
“It’s a little bit of a balancing act,” he said.
“They’re going to be doing a pros and cons kind of analysis and we could see some reshuffling of the cards.”
1:29 Coronavirus outbreak: Federal government to offer support for quarantined Canadians impacted by COVID-19
Coronavirus outbreak: Federal government to offer support for quarantined Canadians impacted by COVID-19
While Morneau wouldn’t say what measures the government was considering, he said there are a number of options that have been used in the past.
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He also hinted last week that the focus would be on helping people who find themselves in quarantine but that right now, the impact of the spread of the virus in Canada is still not clear.
While Health Minister Patty Hajdu has called the virus “low-risk” for Canadians, the country now has more than 50 confirmed and presumed cases in four provinces, and the federal government is boosting cash available for research from $7 million to $20 million.
Health officials in B.C. also raised questions on Friday that the province may have its first case of community spread of the virus, meaning someone there got it from another person rather than from travel abroad or contact with known cases.
The U.S. has also barred entry to Canadian travellers who have recently been in several of the countries hit hardest by the outbreak, raising more questions about what the impact of a more extensive border crackdown could mean for businesses and Canada’s export-reliant economy.
Morneau said his job is to consider all possibilities, and that’s what he’s doing.
DePratto added it’s tough to tell right now what the extent of the economic impact will be.
“We’re not talking about a recession quite yet but really a bit of a grind.”
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3:41 The economic impact of the coronavirus, explained
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
OTTAWA – Statistics Canada says the country’s merchandise trade deficit narrowed to $1.3 billion in September as imports fell more than exports.
The result compared with a revised deficit of $1.5 billion for August. The initial estimate for August released last month had shown a deficit of $1.1 billion.
Statistics Canada says the results for September came as total exports edged down 0.1 per cent to $63.9 billion.
Exports of metal and non-metallic mineral products fell 5.4 per cent as exports of unwrought gold, silver, and platinum group metals, and their alloys, decreased 15.4 per cent. Exports of energy products dropped 2.6 per cent as lower prices weighed on crude oil exports.
Meanwhile, imports for September fell 0.4 per cent to $65.1 billion as imports of metal and non-metallic mineral products dropped 12.7 per cent.
In volume terms, total exports rose 1.4 per cent in September while total imports were essentially unchanged in September.
This report by The Canadian Press was first published Nov. 5, 2024.
