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Opinion: Throne Speech addresses building the economy, but where's the strategy? – The Globe and Mail

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Governor General Mary Simon delivers the Throne Speech in Ottawa on Nov. 23.POOL/Reuters

The title of Tuesday’s Speech from the Throne was “Building a Resilient Economy.” Don’t be fooled. This document may be many things, but it’s devoid of vision for an economic rebuild.

The text of the speech itself – intended to lay out the priorities of the government at the start of a new legislative session – does contain the word “economy” 11 times. Yet even for a document that typically is big on broad aspirational assertions and thin on specific policy intentions, there is shockingly little meat on those “economy” bones. (As my colleague Andrew Coyne pointed out in a Twitter post, the words “productivity,” “investment” and “growth” appear in the text a combined ZERO times.)

The re-elected Liberal government of Prime Minister Justin Trudeau has presented a game plan in which economic renewal is not so much a priority in itself, but rather a byproduct of the biggest files on the government’s to-do list. In the short term, the core of the plan is “end the pandemic.” For everything beyond that, it’s “green the environment.”

Trudeau government’s Speech from the Throne contains warning that ‘Earth is in danger’

There is a lot of truth in that. These are crucial factors that will go a long way in determining the economy’s stability and growth trajectory, regardless of anything else our federal government pulls out of its policy hat. Nevertheless, the fact that public-health and environmental policies have economic ramifications hardly makes them the centrepieces of a coherent economic strategy.

Of course, a Throne Speech is far from a definitive statement on any government’s plans. The fall economic update expected in the next few weeks should reveal much more about this government’s intentions and their cost.

Nevertheless, the opening message from Mr. Trudeau entering his renewed mandate seems to be that if we do well on his government’s biggest priorities, the economy will come along for the ride. There’s little evidence of a coherent postpandemic strategy to build a stronger, more resilient, more productive and competitive Canadian economy.

The speech did address two major Liberal commitments that represent critical contributors to Canada’s future economic well-being: national affordable child care and increased immigration. Both are, at their heart, economic policies – the ultimate goal is to expand our labour capacity and efficiency, which is important for future growth. But these are re-affirmations of the policies of past Justin Trudeau governments. This is not new economic vision, it’s unfinished business.

In terms of new ideas, we’re still waiting. We waited through an election campaign, and now through a Throne Speech.

“Other countries are launching ambitious plans to unleash innovation, lower taxes and slash red tape to get their economies surging – and we see nothing from Justin Trudeau,” Conservative Party Leader Erin O’Toole said on Wednesday.

Whether you agree or not with the kinds of actions Mr. O’Toole suggests, they’re a lot more than the Liberals are talking about at this stage.

A government that was truly dedicating its mandate to building a better economic future would be stating an objective to finally remove interprovincial trade barriers, an absolute no-brainer to unlock economic potential, raise productivity and accelerate Canadian business competitiveness. A much-cited 2019 paper from the International Monetary Fund, co-authored by University of Calgary economist Trevor Tombe, estimated that the elimination of barriers to trade in goods from province to province would boost per-capita gross domestic product by about 4 per cent.

A government committed to economic renewal would launch a long-overdue full review of the antiquated Canadian tax code, a convoluted mish-mash of measures bolted onto a framework designed for an economy of more than 50 years ago. Critics have been saying for years that a revamp of the tax system could create a more competitive and attractive environment to foster business growth, investment and innovation. As a start, a healthy and sustained recovery will be elusive without an awakening of the country’s chronically lacklustre business spending – a problem crying out for policy measures as we emerge from the pandemic.

A government focused on economic priorities would direct its energies to a new strategy for education and retraining, to address the deepening skills mismatches in this country. Labour shortages, especially in specialized high-skill areas and in emerging technologies, were a problem long before the pandemic; the crisis has reshaped the labour landscape in ways that will demand new thinking and new policy.

The Throne Speech offers none of that. It pays lip service to our future economic security while avoiding committing itself to any new and ambitious ideas that would truly help achieve that. Its best ideas are old ones.

Let’s hope this Throne Speech is just a placeholder while the government prepares a more meaningful and concrete approach to the country’s biggest economic challenges. After almost two years of crisis and an unnecessary election, this is not nearly enough.

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India's economy grows by 8.4% amid signs of recovery – Yahoo Canada Finance

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NEW DELHI (AP) — India’s economy grew at an 8.4% annual pace in the July-September quarter in the latest sign of an economic recovery in Asia’s third-largest economy, the government reported Tuesday.

India suffered one of the biggest setbacks of any major economy in the last fiscal year.

In the same quarter a year before, the economy contracted by 7.4%, badly hit by rising COVID-19 cases and a stringent nationwide lockdown, with restrictions lasting months that dealt a huge blow to economic activity.

After a devastating surge in virus cases stoked by the delta variant earlier this year, the situation has improved in recent months. Daily cases have sunk to about 10,000 after breaching 400,000 in May. The pace of vaccinations has picked up, instilling confidence in reopening businesses and industries. Streets and markets across the country are now abuzz with activity.

Sectors like agriculture and mining performed well and helped lead the growth seen in the July-September quarter, experts said.

The economy expanded at a 20.1% pace in the April-June quarter, the fastest growth since India began publishing GDP figures in 1996. But economists cautioned that the rise was calculated from 2020’s smaller base, when the economy shrank by 24.4% in April-June, pulling the country into a recession.

A country enters a technical recession if its economy contracts for two successive quarters.

In 2020-21, India’s growth contracted by 7.3%, worsening from a slowdown that slashed growth to 4% from 8% in the two years before the pandemic hit.

The Associated Press

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Analysis-Japan keen to speed up digital yen launch as China adds geopolitical twist

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Japan‘s new political leadership is calling on the country’s financial bureaucrats to ramp up efforts toward issuing a digital currency, pointing to China’s far quicker progress as a potential challenge to the global economic order.

The government has increased staff looking into legal and technical aspects of issuing a central bank digital currency (CBDC), which are digital forms of existing currencies.

While the political attention has yet to translate into any other direct investment, it is also likely to keep the Bank of Japan (BOJ) under pressure to shift away from its cautious, baby-step approach toward issuing a digital yen, analysts say.

“We must think about what could happen to Japan’s national security if other countries move ahead on CBDC,” said Takayuki Kobayashi, a minister overseeing economic security – a new role created under Prime Minister Fumio Kishida’s administration.

“Japan must speed things up so it’s ready to issue a digital yen any time,” he said.

A global front-runner, China has already run tests in major cities for a possible launch of a digital yuan next year. Japan, along with other G7 advanced nations, have moved much slower.

The BOJ only started the first phase of its experiment in April, and says it has no immediate plans to issue a digital yen. Pilot programmes, if any, won’t take place until 2023 at the earliest.

That lukewarm stance may be put to test as Kishida has made economic security a policy priority, and framed questions around CBDC beyond finance into one of national security.

While G7 central banks generally agree on the need to counter China on issues around privacy, the case is particularly strong for Japan as lawmakers worry about the growing economic might of its assertive neighbour.

Some influential ruling party lawmakers see China’s advances on CBDC as a potential threat to the dollar’s status as a global reserve currency, and the financial dominance of Washington – Japan’s biggest ally.

A close aide to Kishida told Reuters Japan must “work closely with the United States to counter any attempt that threatens the dollar’s reserve-currency status,” adding the BOJ was coordinating with the finance ministry to ensure speedy progress for issuing a digital yen.

Opposition parties have also called in their election campaign platforms for speeding up CBDC plans.

BOJ officials say China’s plan won’t directly affect the timeframe for their CBDC experiments as the key purpose of issuing a digital yen is to provide convenient, efficient payment and settlement means to the public.

What could affect the BOJ more than China’s plan would be how quickly its European and U.S. counterparts announce plans for issuing CBDCs, say sources familiar with its thinking.

Debate over issuing a digital yen may intensify next year as Kishida’s administration lays out details of its economic security plans, and as China is seen promoting its digital yuan at the Beijing Winter Olympic Games in February.

“It’s clear Kishida’s administration and his ruling party are keen on issuing a digital yen,” said former BOJ board member Takahide Kiuchi, who is currently an economist at Japan’s Nomura Research Institute.

“If China launches a digital yuan next year and Europe’s central bank announces plans to issue a digital euro, that will have a huge impact on Japan and pile pressure on the BOJ.”

 

(Reporting by Leika Kihara; Additional reporting by Kaori Kaneko and Tetsushi Kajimoto; Editing by Kim Coghill)

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Global economy rebounds, but for how long? – FRANCE 24

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Issued on: 01/12/2021 – 04:12Modified: 01/12/2021 – 04:10

Paris (AFP) – The world economy woke up from its pandemic-induced coma in 2021, but soaring inflation, global supply chain bottlenecks and a resurgent coronavirus have taken the shine off the comeback.

Now growth is at risk of weakening next year.

Here is a look at the state of the global economy:

Uneven recovery

Countries have posted impressive growth figures as they clawed their way out of the depths of the 2020 Covid-induced recession, but some are faring better than others as wealthier countries have had better access to vaccines.

The United States has overcome its worst downturn since the Great Depression while the eurozone’s economy could return to pre-pandemic levels by the end of the year.

But a resurgence of the coronavirus could scupper the recovery, with the emergence of the Omicron variant raising new concerns.

“Covid-19 will remain a public health threat, particularly in countries where vaccination rates remain low,” said analysts at Moody’s credit ratings agency.

Many US employers had difficulty hiring enough employees to meet recovering business demand

Many US employers had difficulty hiring enough employees to meet recovering business demand MARIO TAMA GETTY IMAGES NORTH AMERICA/AFP/File

With a 2.5 percent vaccination rate, the economy of sub-Saharan Africa is growing at a slower click, according to the International Monetary Fund.

Most emerging and developing countries should remain far behind their pre-pandemic forecasts by 2024, the IMF says.

Central banks in Brazil, Russia and South Korea have raised interest rates to combat rising inflation, a move that could rein in growth.

China, the world’s second biggest economy and a driver of global growth, is facing a slew of risks: New coronavirus cases, an energy crunch and fears over the debt crisis at real estate giant Evergrande.

Inflation soars

Inflation has accelerated to multi-year highs around the world, as consumers returned with a vengeance and industries faced shortages.

Prices have soared across the board, with oil, natural gas and raw materials such as wood, copper and steel going through the roof.

“The biggest surprise of 2021 has been the goods-led inflation surge,” Goldman Sachs analysts wrote in a 2022 outlook.

Central banks insist the inflationary pressure is a temporary consequence of economic activity returning to normal this year after it came to a halt when the pandemic erupted in 2020.

US inflation

US inflation Eléonore HUGHES AFP/File

Stock markets have hit new record highs this year, but investors are concerned that central banks will withdraw their stimulus programmes and raise interest rates earlier than expected to tame inflation.

“The question is whether we really are in the end of the crisis,” said Roel Beetsma professor of macroeconomics at the University of Amsterdam.

Widespread shortages

Industries have struggled to keep up with a surge in demand from consumers.

Global trade has been disrupted by insufficient shipping containers, congestion at ports and labour shortages.

One key component that is hard to come by these days is semiconductors, chips used in everything from phones to video game consoles to the electronic systems of cars.

Shortages of computer chips held back production of cars and some consumer goods

Shortages of computer chips held back production of cars and some consumer goods JENS SCHLUETER AFP/File

The shortage has been so bad that several automakers have had to temporarily halt production at some factories.

Labour shortages have added to the problem as truck drivers, port workers and cashiers have not returned to work following lockdowns.

Despite the difficulties, the IMF expects the world economy to grow by a healthy 4.9 percent next year.

Climate change

In addition to the pandemic, economies had to come to grips with another life-threatening event this year: climate change.

The conflict between economic growth and saving the planet came to the fore at the COP26 climate summit in Glasgow, Scotland, this month.

Nearly 200 nations signed a deal to try to halt runaway global warming after two weeks of painful negotiations, but fell short of what scientists say is needed to contain dangerous rises.

Fires during heatwaves which experts have linked to climate change have caused much damage in parts of Europe and the United States

Fires during heatwaves which experts have linked to climate change have caused much damage in parts of Europe and the United States ANGELOS TZORTZINIS AFP/File

Droughts and other climate catastrophes threaten to further drive up food prices, which jumped to a 10-year high in October, according to the Food and Agriculture Organization.

Wheat has soared by 40 percent in the past year while dairy products are up 15 percent and vegetable oils reach new records.

“It’s pretty obvious. Everything has gone up,” said Nabiha Abid, a resident of Tunisia’s capital, noting that the price of meat has doubled.

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