New Brunswick’s economy is projected to fully rebound and grow 1.2 per cent beyond its pre-pandemic levels by next year, the second best rate of recovery in Canada, according to the latest economic outlook from the Bank of Montreal.
The bank updates provincial economic projections weekly and in its latest edition suggests five provinces are likely to see their economies get back to 2019 levels by 2021 although only Prince Edward Island and New Brunswick are picked to move more than 1 per cent higher.
It’s a development the bank’s chief economist Douglas Porter is crediting largely to the provinces’ successful handling of the COVID-19 crises.
“I put it down mostly to the better performance with the virus in general,” said Porter.
“The Maritimes have fared much better than the rest of the country to the point where they can almost operate close to normal now, certainly closer than much of the rest of the country.”
National economy won’t bounce back until 2022
By contrast the national economy is not expected by the bank to get fully past its 2019 gross domestic product levels until 2022.
Nevertheless the handling of New Brunswick’s economy has become a central issue in the province’s provincial election campaign with Liberals contending not enough is being done to support recovery.
We’re doing well right now in comparison to other provinces. I am not going to promise you things with your tax dollars to buy your vote.– PC Leader Blaine Higgs
On Monday Liberal Leader Kevin Vickers continued his attack that PC Leader Blaine Higgs should be accessing more infrastructure money from Ottawa, matching it with provincial funds and spending it on needed projects to stimulate more growth.
“We need to stabilize our province’s situation. Right now New Brunswick is headed for the wall.” said Vickers.
“If we continue at this pace it will take decades to recover.”
COVID-19 pushes budget into the red
Roger Melanson, Liberal campaign finance spokesperson and the province’s former finance minister, said even if New Brunswick is projected to weather the current economic downturn better than other provinces, that does not undermine Liberal election messaging that Higgs is mismanaging the recovery.
“If our provincial government would want to partner with the federal government and some municipalities our growth would be even more significant,” said Melanson.
Melanson said he could not give an exact figure on how much more money the province should be spending.
The pandemic has pushed New Brunswick’s budget into the red although the province has kept a tighter lid on its finances than all other provinces.
Last week the New Brunswick’s Department of Finance, released an updated fiscal outlook projecting a budget deficit of $304.9 million this year.
At $390 per person, it will be the smallest per capita deficit in Canada among the ten provinces, which as a group are spending an average of $2,400 per person more than they are raising in revenue. The federal government’s deficit this year is more than $9,000 per person
But even with a lower deficit than other provinces this year New Brunswick still has the second highest debt level as a percentage of its economy after Newfoundland and Labrador.
On Monday Higgs said the province will be better served by not spending more.
“We’re doing well right now in comparison to other provinces,” he said.
“I am not going to promise you things with your tax dollars to buy your vote.”
Economist advises to ‘stay flexible’
Porter said governments around the world are debating how much to spend on recovery and how much to hold in reserve in case the virus mounts a return this fall or winter.
“My advice would basically be stay flexible and see how things develop,” said Porter.
“New Brunswick is in better shape (than other provinces) and there’s probably a little less immediate requirement for government to step in at this point.”
Why falling immigration isn't that bad for the economy during COVID-19 – Yahoo Canada Finance
COVID-19 travel restrictions have put a big dent in immigration, widely seen as something the economy relies on, but the negative effects aren’t as bad as they might seem.
The latest government numbers show 13,645 fewer permanent residents came to Canada in July, down 63 per cent from the same month last year. April and June were similarly weak periods, making the likelihood of reaching the federal government’s target of 341,000 less likely.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="For a country like Canada with an aging population and relatively low population growth, immigration is needed to counter demographic headwinds. But the pandemic’s effects more generally, far outweigh the specific negative effects of lower immigration.” data-reactid=”18″>For a country like Canada with an aging population and relatively low population growth, immigration is needed to counter demographic headwinds. But the pandemic’s effects more generally, far outweigh the specific negative effects of lower immigration.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="“I think we need to keep the incremental impact of new immigration on economic growth in perspective. Even at its maximum pace in recent years, it was adding roughly 1 per cent to population per year and roughly the same to the labour force.” BMO chief economist Doug Porter told Yahoo Finance Canada. ” data-reactid=”19″>“I think we need to keep the incremental impact of new immigration on economic growth in perspective. Even at its maximum pace in recent years, it was adding roughly 1 per cent to population per year and roughly the same to the labour force.” BMO chief economist Doug Porter told Yahoo Finance Canada.
“So, even a complete shutdown of immigration would (roughly) shave 1 percentage point from growth (or a bit less). Not small by any means, but that compares with what could be a 6 per cent drop in GDP (OECD said -5.8 per cent for this year, we are looking at -5.5 per cent).”
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Around 1.1 million Canadians are still out of work, so immigrant workers aren’t exactly in high demand these days.” data-reactid=”21″>Around 1.1 million Canadians are still out of work, so immigrant workers aren’t exactly in high demand these days.
“Overall, given the realities of COVID and the now-soft demand for labour, the cool down in immigration by itself will not be particularly harmful — and certainly less so than it would have been say a year ago.” said Porter.
Long term effects without immigration
Pedro Antunes, the Conference Board of Canada’s chief economist, also thinks the effects are mitigated in the short-term but that doesn’t mean the economy will be totally unscathed.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="“Some sectors will be affected because immigration drives consumer spending, demand for housing, and other services directly related to increased population,” he told Yahoo Finance Canada.” data-reactid=”25″>“Some sectors will be affected because immigration drives consumer spending, demand for housing, and other services directly related to increased population,” he told Yahoo Finance Canada.
However, he believes it’s more important to look at the long term repercussions of reduced immigration.
“Canada’s underlying capacity is dependent on private and public investment, adoption of technology and the number of workers (and the skills of those workers). We know from our prior research that without immigration, our labour force would be flat or declining (since exiting baby-boomers outnumber school leavers),” said Antunes.
“If immigration levels are reduced over a few years (we think 2020 and 2021 at least) the result is a long-lasting impact on our potential (or productive capacity).”
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.” data-reactid=”29″>Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Download the Yahoo Finance app, available for Apple and Android.” data-reactid=”30″>Download the Yahoo Finance app, available for Apple and Android.
EU looks to fast 5G, supercomputers to boost virus-hit economy – TheChronicleHerald.ca
By Foo Yun Chee
BRUSSELS (Reuters) – The European Commission on Friday urged the 27-country bloc to work together to speed up the rollout of fibre and 5G networks to boost the region’s virus-hit economy and secure its technology autonomy.
EU countries should develop a best practices toolbox by March 30 with the aim of cutting cost and red tape, provide timely access to 5G radio spectrum and allow for more cross-border coordination for radio spectrum for 5G services, the EU executive said.
The coronavirus outbreak showed how important internet services and 5G are, European digital chief Margrethe Vestager said.
“We have seen the current crisis highlight the importance of access to very high-speed internet for businesses, public services and citizens, but also to accelerate the pace towards 5G,” she said in a statement. “We must therefore work together towards fast network rollout without any further delays.”
The Commission also proposed a recommendation to boost research and activities to develop new supercomputing technologies.
“Keeping up in the international technological race is a priority, and Europe has both the know-how and the political will to play a leading role,” Internal Market Commissioner Thierry Breton said in a statement.
The Commission is investing 8 billion euros($9.46 billion)in the next generation of supercomputers.
(Reporting by Foo Yun Chee; Editing by Tomasz Janowski)
Charting the Global Economy: Fed Signals Rates on Hold for Years – BNN
(Bloomberg) — The Federal Reserve signaled it will keep its benchmark interest rate near zero through 2023 to help the world’s largest economy recover from the coronavirus pandemic.
Cheap borrowing costs are fueling demand for U.S. housing and leaving builders brimming with optimism in the process. In China, retail sales and industrial output are on the mend, while in the U.K., the virus-related shutdowns are having a large negative impact on youth employment.
Here are some of the charts that appeared on Bloomberg this week, offering insight into the latest developments in the global economy:
The global economic slump won’t be as sharp as previously feared this year, though the recovery is losing pace and will need support from governments and central banks for some time yet, according to the OECD.
The Federal Reserve’s so-called dot plot, which the central bank uses to signal its outlook for the path of interest rates, shows that officials expect no change in policy this year and borrowing costs near zero through 2023.
Homebuilder optimism rose to a record in September, with low mortgage rates driving a housing boom that has boosted the pandemic economy, National Association of Home Builders data show.
The U.K.’s lockdown hit young workers particularly hard, with employment in the 16-24 age category falling by 156,000. That may reflect the share of young workers in hotels, restaurants and bars, a sector devastated by the pandemic.
China’s economic recovery from Covid-19 accelerated, spurred by a rebound in consumption as virus restrictions eased and larger-than-expected gains in industrial output. Retail sales rose for the first time this year in August, by 0.5% from a year earlier, while industrial production expanded 5.6%, against a forecast of 5.1%.
Scoring 75 emerging-market and frontier economies, Bloomberg Economics finds that Asia leads in getting closer to pre-outbreak norms, with some countries in Africa and Eastern Europe also outperforming. Latin America is still struggling to contain the pandemic, with 18 of the bottom 25 in the ranking in Latin America or the Caribbean.
Saudi Arabia’s crude exports dropped to the lowest since at least 2016 in the second quarter as it led a campaign alongside Russia to curb oil production following a coronavirus-induced price crash. While the effort yielded a stark turnaround in prices in May and June, Saudi revenue from oil sales still plunged almost 62% in the three-month period from a year earlier.
South Africa is among the countries with the highest percentage of smokers globally, with almost one in every three adults lighting up. So when the government banned cigarette sales for about five months of the nation’s Covid-19 lockdown, some 90% found a workaround.
©2020 Bloomberg L.P.
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