Economy

Russia’s economy shrinks by less than expected

Published

2 years ago

February 20, 2023

Russia’s economy shrank last year by less than had been expected given its invasion of Ukraine, figures suggest.

The economy contracted by 2.1%, according to the country’s statistics agency, but this was less than an earlier prediction of a 12% fall.

While questions have been raised about the reliability of the data, many commentators have been surprised at the Russian economy’s resilience.

High oil prices and military spending have helped to support the economy.

After the invasion, hundreds of Western firms withdrew from Russia. The initial shock forced the stock market in Russia to close temporarily and saw the rouble tumble as people queued up at cash machines.

The Institute for International Finance had predicted the Russian economy would shrink by 15% in 2022 and last March, US President Joe Biden said it was “on track to be cut in half”.

However, for most of 2022, Russia was able to continue exporting energy.

Western limits to energy exports were only applied gradually during the year, and while imports to Europe fell sharply during the year, a steady stream of buyers in China, India and elsewhere stepped in to buy up the oil which Europe would not.

Rising global prices for oil, gas, petroleum products and other Russian exports, including food and fertilizers, helped to boost Russia’s export revenues.

While hundreds of Western companies withdrew from Russia, local entrepreneurs picked up the slack. After McDonald’s sold its restaurants there, for instance, the new owner reopened them in June under a new name “Vkusno i Tochka”, meaning “Tasty and That’s It.”

Although manufacturing and retail trade were some of the sectors which saw a decline in 2022, agriculture, construction and hospitality all grew, according to Russia’s federal statistics service.

Producing equipment for Russia’s armed forces has also kept the country’s factories busy, boosting the economy by making weapons instead of cars. Military security and public administration expanded by 4.1% last year.

The sanctions imposed have also been far from watertight. Despite attempts to isolate Russia from the Western financial system, traders have found ways to get money into and out of Russia, through barter, routing transactions through countries which are not taking part in sanctions, or even using cryptocurrencies.

That is not to say that sanctions have not made a significant dent – and some of the impact will be long term.

Difficulty getting high-tech imports such as microchips will hold back manufacturing.

Experts expect output from oil and gas fields to decline over time without investment, know-how and equipment from the West.

The Russian government is predicting that the economy will shrink by 0.8%, but the International Monetary Fund reckons it will grow by 0.3%, partly because of the strength of its exports.

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Economy

S&P/TSX up more than 200 points, U.S. markets also higher

Published

4 days ago

October 11, 2024

Anne Joseph

TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.

The S&P/TSX composite index was up 205.86 points at 24,508.12.

In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.

The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.

The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.

The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.

This report by The Canadian Press was first published Oct. 11, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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Economy

Economy adds 47,000 jobs in September, unemployment rate falls to 6.5 per cent

Published

4 days ago

October 11, 2024

Anne Joseph

OTTAWA – The economy added 47,000 jobs in September, while the unemployment rate declined for the first time since January to 6.5 per cent, Statistics Canada reported on Friday.

The agency says youth and women aged 25 to 54 drove employment gains last month, while full-time employment saw its largest gain since May 2022.

The overall job gains followed four consecutive months of little change, the agency said.

The unemployment rate has been steadily climbing over the past year and a half, hitting 6.6 per cent in August.

Inflation that month was two per cent, the lowest level in more than three years as lower gas prices helped it hit the Bank of Canada’s inflation target.

The central bank has cut its key interest rate three times this year, and is widely expected to keep cutting as inflation has subsided and the broader trend points to a weakening in the labour market.

Despite the job gains in September, the employment rate was lower in the month, reflecting continued growth in Canada’s population.

Statistics Canada said since the employment rate saw its most recent peak at 62.4 per cent in January and February 2023, it’s been following a downward trend as population growth has outpaced employment growth.

On a year-over-year basis, employment was up by 1.5 per cent in September, while the population aged 15 and older in the Labour Force Survey grew 3.6 per cent.

The information, culture and recreation industry saw employment rise 2.6 per cent between August and September, after seven months of little change, Statistics Canada said, with the increase concentrated in Quebec.

The wholesale and retail trade industry saw its first increase since January at 0.8 per cent, while employment in professional, scientific and technical services was up 1.1 per cent.

Average hourly wages among employees rose 4.6 per cent year-over-year to $35.59, a slowdown from the five-per-cent increase in August.

The unemployment rate among Black and South Asian Canadians between 25 and 54 rose year-over-year in September and was significantly higher than the unemployment rate for people who were not racialized and not Indigenous.

Black Canadians in that age group saw their unemployment rate rise to 11 per cent last month while for South Asian Canadians it was 7.3 per cent. For non-racialized, non-Indigenous people, it rose to 4.4 per cent.

This report by The Canadian Press was first published Oct. 11, 2024.

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Economy

S&P/TSX composite little changed in late-morning trading, U.S. stock markets down

Published

5 days ago

October 10, 2024

Anne Joseph

TORONTO – Canada’s main stock index was little changed in late-morning trading as the financial sector fell, but energy and base metal stocks moved higher.

The S&P/TSX composite index was up 0.05 of a point at 24,224.95.

In New York, the Dow Jones industrial average was down 94.31 points at 42,417.69. The S&P 500 index was down 10.91 points at 5,781.13, while the Nasdaq composite was down 29.59 points at 18,262.03.

The Canadian dollar traded for 72.71 cents US compared with 73.05 cents US on Wednesday.

The November crude oil contract was up US$1.69 at US$74.93 per barrel and the November natural gas contract was up a penny at US$2.67 per mmBTU.

The December gold contract was up US$14.70 at US$2,640.70 an ounce and the December copper contract was up two cents at US$4.42 a pound.

This report by The Canadian Press was first published Oct. 10, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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