Blockades that have crippled Canada’s rail network over the past few weeks are already proving a bigger hit on the economy than the CN strike in November, economists say.
Protesters have blocked rail lines across the country in support of the Wet’suwet’en opposition to the Coastal GasLink pipeline project in B.C. The most disruptive has been a blockade set up Feb. 6 on the Quebec to Windsor line near Belleville, Ont. which shut down CN’s eastern freight network and Via Rail’s passenger service.
Rail freight data for last week showed that traffic fell 18%, compared to the week before the blockades began, said Capital Economics senior Canada economist Stephen Brown. Since CN only completely shut down its eastern network at the end of last week, rail freight probably fell further this week.
The disruption has led to shortages of fuel and other supplies across the country, ramping up the pressure on the Canadian government to resolve the crisis. But even if the blockades are lifted in the next few days and rail service returns to normal, Capital estimates freight traffic will be down 10% to 15% in February.
During the week-long CN Rail strike in November freight declined by just 0.9%, with a total hit to the economy of about 0.1%. The blockades, on the other hand, could shave 0.25% off February’s GDP and Capital is cutting its forecast for the first quarter from 1.8% to 1.5% growth.
Is this likely to influence the Bank of Canada? “Given the temporary nature of disruption, the blockades are unlikely to tip the scales toward an interest rate cut unless they last much longer,” said Brown.
Hard to call that one.
Here’s what you need to know this morning:
- Natural Resources Minister Seamus O’Regan will be at the Emera Innovation Exchange in St. John’s, N.L., to announce an important investment from the Ocean Supercluster as part of the Innovation Superclusters Initiative
- Foreign Affairs Minister Francois-Philippe Champagne to deliver speech to Montreal Council on Foreign Relations
CRTC hearings on mobile wireless services.
- Notable Earnings: Royal Bank of Canada, Teck Resources, Home Capital Group, Magna International, Canfor, Deere & Co.
- Today’s Data: Canadian retail sales, U.S. existing home sales
Victoria remains the only housing market in Canada flashing high vulnerability, according to the Canada Mortgage and Housing Corp. In its quarterly report card yesterday, the CMHC cut the vulnerability rating of four prairie cities, Edmonton, Calgary, Saskatoon and Winnipeg, from moderate to low. In Victoria, however, home prices continue to rise faster than the economy and population growth can explain. Toronto is also seeing higher prices, but here the rise is in line with the economic and demographic fundamentals.
With files from The Canadian Press, Thomson Reuters and Bloomberg
Xi resets policy priorities to boost economy – The Tribune India
China’s Central Economic Work Conference (CEWC), held at Beijing from December 8 to 10, 2021, decided that all stakeholders should work actively to maintain stability in the macro-economy in view of new challenges as the country holds the Winter Olympics from February 4 to 20, 2022, and the 20th Congress of the Communist Party of China (CPC) later this year. What made the economic planners to rethink the policy direction was the sharp dip in China’s GDP growth rate from 18.3% in Quarter 1 of 2021 to 7.9% in Q2, 4.9% in Q3 and 4% in Q4.
Structural changes ordered by President Xi Jinping such as reducing loans to the real estate sector, lower emission targets resulting in power cuts and the zero tolerance to Covid-19 had played an important role in decelerating the economic growth. Xi is personally involved in directing the real estate policies as he considers the unchecked growth of this sector as posing a threat to China’s economic stability.
New measures undertaken by the Xi regime included severe restrictions on giving bank loans, allow hugely indebted developers to default to rein in large unproductive expenditure and announcement of a property tax on a trial basis in certain provinces to discourage the purchase of multiple properties to curb speculation. Given that the real estate sector accounts for 29% of the Chinese economy, these measures, according to some economists, may reduce China’s GDP growth by about 0.5% in 2022 and thereafter. These restrictions have strained the local government’s finances, as selling land is an important source of revenue. Several local governments slashed the salaries of their staff, weakening the consumption.
In the last two years, China has undertaken several measures to reduce its greenhouse emissions, including controlling of its coal-fired power plants to meet its targets of peaking carbon dioxide emissions by 2030, lower the carbon dioxide emissions per unit of GDP by over 65% (from 2005 level) by 2030, increase the share of non-fossil fuels and forest stock. Decrease in power generation by coal-fired plants and rationing since September 2021 disrupted industrial production in many provinces as several industries were forced to cut production and reduce jobs. Recurrent outbreaks of Covid in some areas and China’s zero tolerance approach again forced several businesses to close and confined about 20 million people at home. The working of several companies in technology, education and gaming sectors was adversely impacted due to the regulatory actions, resulting in lower earnings and loss of jobs.
At the CEWC, it was felt that new external challenges had arisen as President Biden had not only continued the policies of his predecessor but also taken a harder line with his allies towards China. The Comprehensive Investment Agreement with the EU had remained frozen and China’s relations with Australia and Japan had deteriorated. These countries had become more vociferous in criticism of China’s human rights record and applied a number of sanctions against the Chinese companies and individuals for investments and exports. Several Chinese leaders appeared nervous about the slowing of economic growth in 2022 as Xi is expected to seek an unprecedented third term as President. They advised him that priority should shift to maintaining growth and stability so that the Chinese economy could convey a picture of strength.
Amid deterioration in China’s external environment, the conference identified securing supplies of primary products such as food, soybean, minerals and energy as a priority to prepare for the post-Covid world. “The Chinese people’s rice bowl must be firmly held in their own hands at all times,” Xi emphasised. He underlined the need to establish a strategic materials reserve to secure minimum needs at critical moments and work on a comprehensive conservation strategy. Other four priorities agreed were “common prosperity, capital regulation, defusing major financial risks and carbon neutrality. Concerns were expressed at the high level of unemployment among the migrants, the youth and possible outflow of foreign exchange as the US dollar strengthened following rise in the interest rates.
In view of these reasons, it was agreed that the government would have to give bigger policy support to the economy. China’s central bank had also conveyed dovish signals, cutting the reserve requirement ratio to the banks in a departure from central banks in the developed countries. Though the policymakers remained committed to structural reforms, it was agreed to slow down the regulatory crackdown and provide targeted support to SMEs, first time homebuyers, more funding for technology innovation and green investments.
China’s foreign trade made impressive gains in 2021, reaching $6.05 trillion as it functioned as a supply house to the rest of the Covid-stricken world. Trade with the US soared by 28.7% ($755.6 billion) and India by 43.3% (total $125.66 billion, Indian exports $28.14 billion, imports $97.52 billion). The increased global demand was chiefly responsible for 8.1% growth of China’s economy in 2021.
Chinese leaders are worried that external demand may not sustain as other major economies come out of Covid and start exporting this year. Consumption in China has not moved beyond 55% of the GDP (54.3% in 2020) in recent years due to the saving habits of the Chinese people for expenditure on health, education and old age. The government is, therefore, forced time and again to resort to big investments to drive up the growth rates.
It is now trying to increase investments in research and innovation (its R&D expenditure reached 2.4% of GDP in 2020), adoption of intelligent technologies and digital economy. While these technologies will yield efficiencies and mitigate to some extent the adverse impact of declining workforce, these will not lessen the latter’s adverse impact on lowering consumption. China will, therefore, be forced to accept sub-5% economic growth in the coming years as it rebalances its economy away from non-productive expenditures and starts experiencing the negative effects of population decline.
The so-called 'gig economy' is on the rise — here's what that means for Alberta workers – CBC.ca
They’re the people who pick you up in an Uber or deliver groceries to your door — so-called gig workers, referred to as “independent contractors” by the companies for which they work — and across Canada, there’s an ongoing debate about the future of their industry.
Last month, a report from the Ontario Workforce Recovery Advisory Committee recommended that those who work in the “gig economy” — for example, working for apps such as Uber and Skip The Dishes — should be guaranteed a minimum wage, along with some other protections.
No exact analog to that committee currently exists in Alberta. A spokesperson for Tyler Shandro, Alberta’s minister of labour and immigration, said the provincial government’s primary commitment is to support workers as the economy continues to recover.
“Alberta’s government continues to monitor the gig economy, as it is an evolving sector with unique needs,” said Joseph Dow in an email.
According to a study released by Statistics Canada in 2019, around eight per cent of all workers in Canada participated in gig work in 2016, up from 5.5 per cent in 2005.
Efforts to update laws around how gig workers are paid and what benefits they are entitled to has been a contentious issue over the past few years.
During the last federal election campaign, Conservative Leader Erin O’Toole said that the 1.7 million Canadians working in the gig economy were “left behind” during the pandemic.
An Alberta labour leader says despite the same issues existing for those participating in Alberta’s gig economy — low wages, insecurity and lack of benefits — no conversation is being had provincially about the supports available for these workers.
“I’m profoundly concerned about the shift towards gig work,” said Gil McGowan, president of the Alberta Federation of Labour.
“It’s bad for individual workers. But I would argue that it’s just as bad for the economy, because when people are faced with that kind of insecurity, they can’t participate in the economy in the same way as workers in other sectors.”
Brandon Mundy is a delivery worker with Instacart, a grocery delivery service.
He previously delivered with food delivery platform DoorDash, but said he stopped working for that service due to long periods of delays between orders.
“It can get incredibly competitive these days, because of how saturated the delivery driver industry is right now,” he said.
Even though Mundy said he tends to make more working with Instacart, he’s noticed smaller payouts recently. Plus, he’s been putting significant wear and tear on his vehicle.
“I would sure hope [Alberta] introduces support for gig workers,” Mundy said. “Especially with how popular it is now, especially through COVID.”
Efforts to unionize and departures of platforms
Those gig workers completing tasks for apps like Uber and Lyft are considered independent contractors by the companies.
Therefore, the company isn’t obliged to pay minimum wage or other protections — but that is a “smoke screen,” said Jim Stanford, economist and director of the Vancouver-based Centre for Future Work.
“Courts and labour regulators in many countries around the world are recognizing that and saying, no, just because you assign the work over a smartphone doesn’t mean they’re not your effective employee,” Stanford said.
Uber Canada previously referred CBC News to a proposal that would provide a benefit fund to workers, adding that the company attempts to prioritize “what drivers and delivery people want: flexibility plus benefits.”
Efforts by workers to secure more benefits have also led to certain app-based platforms reconsidering their availability within Canada.
In 2020, food delivery service Foodora announced it would leave Canada in the wake of workers attempting to unionize.
Stanford said such moves suggested that business models of gig platforms depended on the “exploitation of gig workers.”
“That should really be a warning sign for us that this is not a business model that we should encourage in Canada. We have to make sure that they’re subject to the same rules and responsibilities as any other employer,” he said.
“Otherwise, this cancer, which is spreading through the labour market, will continue to undermine wages and working conditions in all kinds of industries.”
Ontario’s recent proposal did not include everything the union-backed group Gig Workers United called for, including for gig workers to receive full employee protections.
In early December, the European Union announced draft legislation that would provide employee rights to gig economy workers, a move that would affect millions of workers.
'Throwaway economy' thwarting climate goals: report – Phys.org
Countries are neglecting the massive impact of the “throwaway” economy on planet-warming emissions, according to research published Wednesday that calculated more than half a trillion tonnes of virgin materials have been consumed since the 2015 Paris climate deal.
From clothing to food, planes to buildings, research by the organisation Circle Economy estimates that 70 percent of greenhouse gas emissions are linked to the manufacturing and use of products.
But in its annual report on the state of the world’s use of materials, researchers said national climate pledges to reduce emissions focus narrowly on fossil fuel use and ignore the mounting global appetite for stuff.
Matthew Fraser, head of research at Circle Economy, said the report aimed to look beyond just fossil fuel use and the transition to green energy and ask about the emissions implications of using fewer resources.
“What if we reimagine our relationship with stuff, what would that bring us? Actually, it is quite significant,” he told AFP.
The report estimates that if the economy were more circular, reducing resource extraction and consumption by 28 percent, then the world could meet the Paris warming target of 1.5 degrees Celsius above pre-industrial levels.
But only a third of nations’ climate pledges mention the circular economy as part of their emissions goals, the report said.
It warns that humanity is consuming 70 percent more virgin materials than the world can safely replenish.
The analysis looks at global material flows based on national import and export figures and translates them into estimates of materials used—and reused.
It calculates annual resource use has grown from 89.8 billion tonnes in 2016 to more than 100 billion tonnes in 2019 and estimated it at 101.4 billion last year.
Circle Economy found that almost all of the materials extracted go to waste, with just 8.6 percent of materials recycled in 2020, what they call the circularity gap.
That is an even lower proportion than in 2018, when reused materials were 9.1 percent of the total, as the global demand for more things surges.
“Even though we are getting more efficient with how we use materials—computers are getting smaller, cars are becoming lighter, recycling is getting better—these micro gains in efficiency just aren’t stacking up relative to the total increasing demand,” said Fraser.
The report identified a number of practices across sectors from food production to transportation that it said could help rein in the ever-expanding use of virgin materials.
Fraser said the model that enables people in richer countries to buy products from all over the world to be delivered within hours and days “will inevitably have to change”.
The report also weighed strategies like enabling electrical goods—which contain critical raw materials including gold, silver and cobalt—to be repaired, redesigning items to be easier to recycle, restricting single-use plastics and renting items like cars rather than buying them.
One sector it identified as having a significant opportunity to reduce its materials footprint was buildings and construction, where Fraser said current practices were far from sustainable.
He said government policy would be needed occasionally to reconfigure the economic incentives that make reusing resources more expensive than using new ones—stressing that this should be seen as an integral part of efforts to curb global warming.
But Fraser said for now the issue remains a significant blind spot for governments, which he said do not pull together data of their countries’ materials footprint.
He added that people in the future may ask tougher questions about whether materials can be recycled before they are even used.
“I think in the future that could become more and more prominent.”
© 2022 AFP
‘Throwaway economy’ thwarting climate goals: report (2022, January 19)
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