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Statistics Canada to release July GDP, initial estimate showed economy contracting – pentictonherald.ca

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OTTAWA – Statistics Canada said Friday the economy shrank 0.1 per cent in July, following a 0.6 per cent rise in June.

The agency’s initial estimate for July real gross domestic product had been for a contraction of 0.4 per cent despite an easing of public health restrictions.

While the majority of sectors the agency tracks grew in July, declines in sectors such as agriculture and manufacturing more than offset any gains.

Crop production, except cannabis, was at it lowest level since November 2007 on the back of drought conditions that Statistics Canada said hurt production of wheat, canola and other grains.

Manufacturing was down 1.1 per cent in July, while the construction sector fell by 0.9 per cent, which the agency said was driven by a third straight month of declines in residential building activity after reaching a record high in April.

Statistics Canada said total economic activity in July was about two per cent below pre-pandemic levels recorded in February 2020.

The agency’s initial estimate for August suggests a rise of 0.7 per cent for the month, which would put total economic activity about one per cent below pre-pandemic levels. The August GDP figure will be finalized at the end of the month.

CIBC senior economist Royce Mendes said the figures for both months were largely in line with expectations, but other figures released by Statistics Canada on Friday suggest GDP is tracking below forecasts for the quarter.

Leading the gains in July was the beleaguered accommodation and food services sector, which has felt the brunt of public health measures restricting in-person services and travel.

Statistics Canada said a combination of summer weather, expanded patio capacity and loosened public health restrictions on indoor and outdoor dining across the country helped fuel a 12.5 per cent gain in the sector, marking the second straight month of double-digit growth.

Air transportation rose 67.7 per cent in the July travel season after fully vaccinated visitors were no longer required to quarantine as of July 5.

Still, each sector is still well below where it was just before the pandemic struck.

Statistics Canada said the accommodations and food services sector in July was 21.3 per cent below February 2020 levels, while air transportation was nearly 83 per cent below pre-pandemic levels.

This report by The Canadian Press was first published Oct. 1, 2021.

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Dollar set for another week of losses even as Fed tapering looms

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The dollar was heading for a second week of declines on Friday as sentiment stayed tilted towards riskier assets, while an intervention by the Australian central bank put a halt to the Aussie dollar’s recent surge.

The dollar index was last at 93.733, little changed in Asian hours but off 0.24% on the week, as it continues its fall from a 12-month high of 94.565 hit in earlier this month.

It had managed to stem losses on Thursday, bouncing on better U.S. jobs and housing data, but the rally petered out on Friday morning in Asia, where risk sentiment was boosted news that beleaguered developer China Evergrande Group has supplied funds to pay interest on a U.S. dollar bond, averting a default.

But traders are still trying to assess whether the dollar has scope to fall further, or if this is a temporary blip on a march higher.

“People are wondering whether we are at an inflection point, as the dollar has been weakening and that doesn’t really fit with the broader narrative that global growth is cooling and the Fed is on the path to tapering, which should be supportive for the dollar,” said Paul Mackel, global head of FX research at HSBC.

On Friday, benchmark 10-year U.S. Treasury yields were at 1.6872%, slightly off from Thursday’s multi-month high of 1.7%, as markets continue to prepare themselves for an announcement by the Federal Reserve that it will start to wind down its massive bond buying programme, which is widely expected for November.

Mackel said part of the reason for the dollar’s weakness had been strong performances by currencies from most commodity exporting countries.

These were quieter on Friday, however, as traders took profits, analysts said, and energy prices softened.

Brent crude, which had risen above $86 dollars a barrel on Thursday, continued its tumble and was last at $84.10.

The Australian dollar was at $0.7475, off Thursday’s three-month top, as the boost to the China-exposed currency from Evergrande’s news was outweighed by action from the Reserve Bank of Australia to stem a bond sell off, as well as the pause in energy price rises.

The RBA said on Friday it had stepped in to defend its yield target for the first time in eight months, spending A$1 billion ($750 million) to dampen an aggressive bonds sell-off as traders have bet on inflation pulling forward rate hikes.

Also affected by energy prices, the Canadian dollar slipped to C$1.2352 per U.S. dollar, off Thursday’s C$1.2287, a level last seen in June.

The British pound paused for breath at $1.3798, off a month peak hit earlier in the week, to which it had been carried by growing expectations of an interest rate hike to combat rising inflationary pressures.

The euro was little changed at $1.1627, while the yen wobbled within sight of its multi-year lows, with one dollar worth 114.01 yen, compared with 114.69 earlier in the week, a four-year low.

China’s yuan eased against the dollar on Friday after the FX regulator warned of possible action if the currency market is hit by greater volatility following its recent rally. But the yuan still looked set for the biggest weekly gain since May.

Bitcoin was at $63,928, a little off Wednesday’s all-time high of $67,016

 

(Reporting by Alun John; Editing by Sam Holmes and Kim Coghill)

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UN sets up trust fund for 'people's economy' in Afghanistan – The Globe and Mail

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A general view ahead of an aid conference for Afghanistan at the United Nations in Geneva on Sept. 13.DENIS BALIBOUSE/Reuters

The United Nations said on Thursday it had set up a special trust fund to provide urgently needed cash directly to Afghans through a system tapping into donor funds frozen since the Taliban takeover in August.

With the local economy “imploding”, the aim is to inject liquidity into Afghan households to permit them to survive this winter and remain in their homeland, it said.

Achim Steiner, the U.N. Development Programme’s (UNDP) administrator said Germany, a first contributor, had pledged 50 million euros ($58 million) to the fund, and that it was in touch with other donors to mobilize resources.

Some 97% of Afghan households could be living below the poverty line by mid-2022, according to UNDP.

“We have to step in, we have to stabilize a ‘people’s economy’ and in addition to saving lives we also have to save livelihoods,” Steiner told a news briefing.

“Because otherwise we will confront indeed a scenario through this winter and into next year where millions and millions of Afghans are simply unable to stay on their land, in their homes, in their villages and survive,” he said.

The International Monetary Fund said on Tuesday that Afghanistan’s economy was set to contract https://www.reuters.com/world/asia-pacific/afghanistans-economic-collapse-could-prompt-refugee-crisis-imf-2021-10-19 up to 30% this year and this was likely to further fuel a refugee crisis that would affect neighbouring countries, Turkey and Europe.

The Taliban takeover saw billions in central bank assets frozen https://www.reuters.com/world/asia-pacific/un-chief-liquidity-needed-stem-afghanistan-economic-humanitarian-crises-2021-10-11 and international financial institutions suspend access to funds, although humanitarian aid has continued. Banks are running out of money, civil servants have not been paid and food prices have soared.

Steiner said the challenge was to repurpose donor funds already earmarked for Afghanistan, where the Taliban, the de facto authorities, are not recognized internationally. The fund allows the international community to be “confident enough that these funds are not meant as government-to-government funding”, he said.

VIRTUALLY NO LOCAL CASH

The U.N. has discussed the programmes with the Taliban, he said, noting that 80% of the micro-businesses being helped were led by women.

“Our greatest challenge right now is that there is a economy in which there is virtually no domestic currency in circulation,” Steiner said, adding that the U.N. wanted to avoid foreign currencies dominating, which would undermine the economy.

“Our intent is to find ways very quickly in which we can convert international support into local currency in order to be able to stimulate local markets, local livelihoods. This is how you keep an economy alive,” he said.

Kanni Wignaraja, director of UNDP’s regional bureau for the Asia Pacific, said that cash would be provided to Afghan workers in public works programmes, such as drought and flood control programmes, and grants given to micro-enterprises. Temporary basic income would be paid to the vulnerable elderly and disabled, she said.

The UNDP had costed activities to be covered over the first 12 months at approximately $667 million, she said.

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This content appears as provided to The Globe by the originating wire service. It has not been edited by Globe staff.

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Economy

Province Invests in Midland Automotive Parts Manufacturer to Boost Local Economy – Government of Ontario News

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Province Invests in Midland Automotive Parts Manufacturer to Boost Local Economy  Government of Ontario News



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