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The numbers don’t lie: Why the Canadian economy is already in much better shape than it looks – Toronto Star



The Canadian economy is in better shape than it looks.

That’s contrary to the gloomy expectations of many Canadians and expert forecasters. For instance, 62 per cent of respondents to the latest Bloomberg Nanos Canadian Confidence Index said they expect the economy to weaken even further in the next six months.

Actually, Canadian economic conditions are improving, not weakening.

It’s commonly said, and with good reason, that Canada won’t return to pre-pandemic economic normality for at least one and a half years.

But considering the economic double-whammy suffered by Canadians — a COVID-19-triggered economic shutdown and a collapse in global oil demand — Canada is recovering sooner than we had reason to expect.

Here’s where we stand, and where we’re headed:

Employment and household income

Canada created 290,000 new jobs last month, one of the strongest one-month job gains on record. And hours worked, which were severely cut as the pandemic got underway, jumped 6.3 per cent, which is a historically large gain in a single month.

And by early this month, the number of Canadians receiving the $500 weekly payment from the Canada Emergency Response Benefit (CERB) had already dropped by 1.2 million from a peak of eight million.

The May jobless rate rose to 13.7 per cent from April’s 13 per cent. But that’s because the workforce expanded with Canadians returning to the job market in search of work — itself a sign of confidence in a strengthening economy.

Bear in mind that the strong May jobs growth was achieved at a time when the Canadian economy had only started to gradually reopen. Indeed, jurisdictions such as Toronto, the country’s biggest workplace, are still in stage one of the lockdown.

The upside on job restoration is tremendous, as Canada’s major cities reopen over the next few months. COVID-19 struck hardest in cities, where about 80 per cent of Canadians live. That’s where lockdowns have done their greatest economic damage while saving tens of thousands of lives.

The main reason job creation promises to continue strong is the federal income supports for individuals and businesses that date from the beginning of the pandemic. They have kept workers and employers in sufficiently good shape to get the economy moving again quickly, as soon as it is safe to do so.

That is a crucial point. There is pressure at home and abroad for governments to withdraw the emergency income supports.

But it is wildly premature to do so. That’s why the Trudeau government extended the CERB program this week. It’s why other major economies, from China to the U.K., are extending income-support programs or rolling out new ones.

And even when the time comes to wind them down, “Fiscal stimulus programs should be on standby, ready to be deployed or increased in order to combat another shutdown” if required by a second wave of the novel coronavirus, Kristina Hooper, global market strategist at Invesco Canada, said last week.

Green shoots

The Bloomberg Nanos confidence index referred to above reported this week that for the seventh straight week Canadians expressed increased confidence in an economic recovery. While almost two-thirds of those polled still believe the economy will weaken over the next six months, that’s down from 80 per cent who were pessimistic four weeks earlier.

And while Canadians still worry about the big picture, they feel quite confident about their own individual prospects. For instance, 64.2 per cent of survey respondents said they felt secure in their jobs, which is where that number stood just before the pandemic.

Canadian household debt levels were at record highs long before the pandemic struck. But Equifax Canada, the country’s biggest credit reporting firm, said this week that Canadian consumer debt balances, excluding mortgages, fell in the first quarter of 2020, the first drop in more than a decade.

And consumer insolvencies plunged to their lowest level in 13 years.

Traditional Canadian financial prudence has reasserted itself during the pandemic. And bolstering that caution are the above-mentioned federal income supports. They have helped dissuade Canadians from turning to debt to get through the crisis.

The so-called “debt bomb”

Ottawa will post unprecedented deficits this year in fighting COVID-19. By May, the projected 2020 deficit was $250 billion. That is pushing our debt-to-GDP ratio to about 100 per cent.

It has been necessary to spend those funds. But how do we pay off that debt?

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Actually, we don’t have to.

Deficit spending during the Second World War pushed the debt-to-GDP ratio well above 100 per cent. And for the next three decades, the feds continued to run annual deficits, all of them added to the national debt.

Yet, by the mid-1970s, the debt-to-GDP ratio was down to about 20 per cent. Decades of postwar economic expansion saw the economy eclipse the size of the debt.

After plunging in 2020, Canadian GDP is expected to soar next year, by about 6 per cent, the Conference Board of Canada’s latest estimate. GDP growth should continue strong thereafter.

In the meantime, Ottawa is financing its debt at rock-bottom rates.

Early in the pandemic, the Bank of Canada (BoC) drastically cut its key lending rate to the current 0.5 per cent.

The BoC also began buying government debt, and is able to buy much more. That practice, called “quantitative easing” (QE), was pioneered in the U.S. during the Great Recession. It helped America recover much faster from the recession than Europe.

Canada, safe harbour for foreign investors

In April, international investors bought $54 billion worth of Canadian federal and corporate debt, Statistics Canada reported this week. That’s a record one-month purchase.

And it’s in addition to $39 billion in Canadian debt bought by non-residents in this year’s first quarter.

“The strong inflows into Canadian debt markets reveal that, even during the height of the crisis in this country, Canada was seen as an attractive place to park funds,” Katherine Judge and Royce Mendes, economists at CIBC Capital Markets, wrote in a client note.

Obviously, we’re not out of the woods. About 6.8 million Canadians continue to rely on CERB payments. Household debt levels have declined, but at 177 per cent of disposable (after tax) income, they remain worrisome.

And we’re in for a “multi-speed” economic recovery. Some sectors will be back to normal relatively soon, including online retailers, tech, manufacturing and construction. Others will struggle longer, including tourism, aviation, oil and gas, and restaurants and hotels.

And we need continued vigilance against the virus. No sooner had New Zealand declared itself COVID-19-free than it had a mini-outbreak this week of three new coronavirus cases.

This is one stubborn virus.

So be well, and keep social distancing.



What does the future hold for the Canadian economy post-pandemic? Share your thoughts

Conversations are opinions of our readers and are subject to the Code of Conduct. The Star does not endorse these opinions.

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Rethinking the boundaries between economic life and coronavirus death –



Carolyn Prouse, Queen’s University, Ontario; Beverley Mullings, Queen’s University, Ontario; Dairon Luis Morejon Perez, Queen’s University, Ontario, and Shannon Clarke, Queen’s University, Ontario

As governments around the world begin to reopen their borders, it’s clear that efforts to revive the economy are redrawing the lines between who will prosper, who will suffer and who will die.

Emerging strategies for restoring economic growth are forcing vulnerable populations to choose between increased exposure to death or economic survival. This is an unacceptable choice that appears natural only because it prioritizes the economy over people already considered marginal or expendable.

The management of borders has always been central to capitalist economic growth, and has only intensified with neoliberal reforms of the last several decades. Neoliberal economic growth has increasingly become tied to opening up national borders to the flow of money and the selective entry of low-wage labour with limited access to rights.

Read more: What exactly is neoliberalism?

Nation-state borders regulate this flow, and in so doing, reconstitute the borders between people: those whose lives must be safeguarded and those who are considered disposable.

COVID-19 has brought heightened visibility to these border-making practices, with the pandemic intensifying the decisions between economic and social life.

A migrant worker from Mexico is shown in downtown Leamington on Thursday, June 25, 2020.

Exceptions made for seasonal workers

Early in the outbreak, for instance, Canada closed its borders to international travel, but made exceptions for an estimated 60,000 seasonal agricultural workers from Latin America and the Caribbean.

Anxious to avert the potential loss of as much as 95 per cent of this year’s vegetable and fruit production, temporary farm workers were deemed the essential backbone of the agri-food economy. For the health and safety of Canadians and seasonal farm workers, farmers required the farm workers to self-isolate for 14 days in order to prevent the spread of the virus.

But the deaths of two farm workers in Windsor, Ont., and serious outbreaks of COVID-19 infections among migrant workers on farms across the country, have revealed systemic forms of racism that reveal the priority given to profit maximization over the health and safety of Black and brown migrant farmers.

Under the Temporary Foreign Worker Program, migrant farmers are not entitled to standard labour rights such as a minimum wage, overtime pay or days off, and federal oversight over housing conditions has been notoriously inadequate.

With worker welfare left largely to the discretion of employers, it is not altogether surprising that reports of crowded and unsanitary housing, an inability to socially distance, delays in responding to COVID-19 symptoms and threats of reprisals for speaking out have become rife throughout the agri-food economy. Even as COVID-19 cases soar in Ontario, provincial guidelines make it possible for infected farm workers to continue working if they are asymptomatic.

It is a tragic irony that the quest for a better life among migrant workers should be one that demands levels of exposure to abuse, threats, infection and premature death that few citizens are likely to face.

Traffic is loaded onto the MV Confederation on Friday morning at the Wood Islands, P.E.I., ferry terminal. Plenty of people were taking advantage of day one the Atlantic bubble. - Dave Stewart/The Guardian
Traffic is loaded onto the MV Confederation on Friday morning at the Wood Islands, P.E.I., ferry terminal. Plenty of people were taking advantage of Day 1 the Atlantic bubble. – Dave Stewart/The Guardian

Choosing between health and the economy

Now, as governments speak of opening borders more widely due to the economic costs of COVID-19, countries are beginning to make new, challenging decisions between public health and economic growth.

For example, across the Caribbean, the abrupt closure of international borders decimated the region’s tourism industry overnight. Estimating a contraction of the industry of up to 70 per cent, Standard & Poor has already predicted that some islands will experience significantly deteriorated credit ratings.

For example, with tourism accounting for half of Jamaica’s foreign exchange earnings and more than 350,000 jobs, it is not entirely surprising that the tourism minister has justified re-opening as “not just about tourism. It is a matter of economic life or death.” It’s also not surprising that resort chains like Sandals and airlines alike have been eager to resume business as usual.

But assurances that “vacations are back,” even as new cases emerge, ring hollow given that most Caribbean countries have long struggled with overburdened health-care systems. And even with new protocols for screening, isolating or restricting the mobility of infected visitors, it is likely that the region’s poorer citizens — many of whom are women in front-line hospitality services — will bear the brunt of the costs of new infections.

Unequal dependencies

The dependence of Caribbean and Latin American governments on tourism and remittance dollars, and Canada’s dependence on Black and brown people to carry out low-paid essential work, are unequal dependencies that are intimately tied. For the most vulnerable, these dependencies mark the stark overlap between economic life and COVID-19 death.

Yet COVID-19 has also presented us with a unique opportunity to rethink the border inequalities that have governed our lives and the primacy of the economy within it.

It forces us to ask: Who does “the economy” serve? What types of activities are valued or dismissed when we prioritize economic growth? Whose life is valued, and whose continues to be expendable?

Prioritizing the economy over the lives of the poorest and most vulnerable should never be an acceptable fix.

This is a collaborative article written by members of the Global Economies and Everyday Lives Lab at Queen’s University, Canada. Nathalia Ocasio Santos, Grace Adeniyi Ogunyankin, Priscilla Apronti, Hilal Kara and Tesfa Peterson co-authored this piece.

The Conversation
The Conversation

Carolyn Prouse, Assistant Professor of Human Geography, Queen’s University, Ontario; Beverley Mullings, Professor of Geography, Queen’s University, Ontario; Dairon Luis Morejon Perez, Phd Student in Geography and Urban Planning, Queen’s University, Ontario, and Shannon Clarke, PhD Student in Geography, Queen’s University, Ontario

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Ukraine economy likely fell 10% in second quarter, full recovery not seen this year: Reuters poll – The Guardian



By Natalia Zinets

KYIV (Reuters) – Ukraine’s economy will be shown to have fallen 10% in the second quarter year-on-year due to restrictions to tame the coronavirus outbreak, and it will not be able to recover fully in the next six months, according to a Reuters monthly poll of analysts.

It would mark the deepest decline since the economic aftermath of Russia’s annexation of Crimea and the outbreak of military conflict in the industrial east, which led to a 14.5% year-on-year fall in the second quarter of 2015.

“Economic activity figures are likely to reveal the full extent of the crisis; we expect the decline to deepen to 10% year-on-year in the second quarter,” analysts for the ICU investment company said in written comments.

Ukraine has secured a $5 billion loan deal with the International Monetary Fund to fight the economic slump, but the market was rattled last week by the shock resignation of the central bank governor.

A robust performance in the farming sector, which has started the grain harvest, may offset some of the damage to the economy from the coronavirus pandemic, but consumer demand and investor activity will remain weak in 2020, analysts said.

They forecast Ukraine’s gross domestic product to shrink 5.5% year-on-year in the third quarter and 3.0% in the fourth quarter.

The State Statistics Service will publish its second-quarter GDP data in mid-August. In the first quarter, the economy declined by 1.3% compared to 2.9% growth in the first quarter last year.

The twelve analysts polled by Reuters see the economy shrinking 6.5% for the full year compared to growth of 3.2% in 2019. The government expects a -4.8% drop in 2020.

“We project GDP to start recovering from 3Q20, but at a slow pace due to lower incomes and precautionary behaviour of consumers and investors,” the ICU said.

The government began imposing restrictions on businesses and people’s movement in March. It began easing those restrictions in May, allowing the operations of public transport, shops, hotels and open-air terraces of restaurants to resume.

But a sharp daily rise of new cases since then has prevented the government from relaxing more restrictions. Ukraine has reported 49,043 coronavirus cases, including 1,262 deaths.

(Editing by Matthias Williams)

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The economy may be opening up – what about your wallet? –




This was supposed to be the year my boyfriend and I got our finances on track. We had made a pact that we’d keep each other accountable so by the time we get married next year, we’d have our debts paid off. We started out doing OK until I had to fly home in March because my dad’s health took a turn for the worse. While I was away the borders closed and by the time I got back, my job was gone. My boyfriend kept working and thankfully could cover our bills because he was spending so much less during the lockdown. I’ve recently found a new job and we’ve been able to stick with spending less on almost everything. It’s a good feeling getting back in control of our money. We’re worried, though, that we’ll go back to spending the way we used to as our life becomes more normal. What can we do? ~Anna


There are a lot of things many of us learned during the pandemic about our money habits. For those whose incomes stayed mostly the same, many found extra opportunities to save, or even help those who needed additional support. If your income was drastically reduced, you likely learned what you wanted to change about your money habits once you were back on your feet. And for people who managed to mostly get by with government income and support programs, they realized what their essential expenses truly were. A common theme throughout this time, however, was that many of us developed new money habits that would be worth maintaining over the coming months and years.

The trick will be finding ways to keep up with our new habits and not fall back into old traps. As you start spending again, be conscious of some of the money traps that could have been inadvertently keeping you in debt. Once you know what to watch for, it will be easier to steer yourself toward success.

Here are four money habits that don’t always look like traps, but can wreak havoc on your bank account and cause big bills:

1. Giving in to retail therapy

As the economy recovers and you want to return to your more normal life, it will be very tempting to restart your spending. Retailers will promote enticing offers and it will be hard to escape the thought that you might be missing out on a really great deal. However,

resist the urge to give in to retail therapy

, both in person and online.

To motivate yourself for long-term success with your financial goals, incorporate a little of what you really want into your budget. If you’re also

paying off debt

, you might need to start with small wants. This is easier to do right now with our choices for spending still somewhat restricted. For instance, the vacation of your dreams likely isn’t possible right now, so start by budgeting for a holiday you



As you pay your debts off, there’s more room in your budget to afford more of the things you really want. To help yourself stay motivated, reward yourself a little along the way. Then before you know it, you’ll be debt free and on to choices in line with goals for a financially stable future.

2. Committing to long-term contracts when life is in transition

When your circumstances are in the midst of change, that is not the time to make long-term commitments. Transition times in life can happen when we least expect them, and COVID-19 has brought on some of the most significant changes many people will ever face.

There are certain times, however, when we can expect change, and not all changes are bad. When we’re between jobs, moving homes, starting a family or going back to school, these can be exciting times of change — but excitement and stress can tempt us to create order and settle ourselves into a routine with a new fitness membership, leased vehicle or cellphone contract, for instance.

Given that we face many unanticipated changes in our lives, read the fine print when making a long-term financial commitment. Know what it would cost to break a contract and weigh your options. Sometimes a slightly higher month-to-month arrangement or a loan versus a lease gets you ahead in the long run.

3. Participating in expensive hobbies

Do you have hobbies you really enjoy? Maybe they’re a social outlet, provide you with exercise and a way to de-stress, or they could be a creative outlet. Sometimes we have family hobbies that involve costly equipment, travel, or come with accommodation expenses. The money we spend on hobbies has likely been left in our bank account or spent on other essentials during the pandemic, so now is a great time to consider options and see if there’s a cheaper way to go. For example:

● Instead of a gym membership, maybe you can get your exercise outdoors or virtually from home.

● If your kids normally participate in a variety of activities, consider what they missed most during the lockdown and only spend on those lessons or classes.

● Could you rent what you need for recreation, e.g., a truck, trailer, boat, jet skis or snowmobiles, rather than make payments on vehicles and pay for their storage, upkeep and insurance?

While hobbies might feel like a necessity, we usually have flexibility in how we do them. Evaluate your choices with your goals in mind and calculator in hand. With a period of time behind us where our normal activities were put on hold, it’s easier to only go back to what we genuinely enjoyed and now want to spend money on.

How to Decide If You Can Afford Another Payment or Not

4. Paying off debt too fast

You might be tempted to

pay off your debts as fast

as possible, but paying them off too fast could keep you broke. It makes sense to pay off debt, especially high-interest credit card debt. However, spending on debt payments without setting money aside for emergencies means that when something unexpected happens, you need to reach for credit to pay for it. One big car repair bill could wipe out months of extra payments to your credit cards in one swipe.

Why Savings Is a Superpower

Rather than aggressively paying off your car loan, for instance, a wiser strategy is to pay it off as quickly as you reasonably can within a balanced approach; let your budget be your guide.

Balance might include

accelerated payments

, e.g., biweekly rather than monthly. It might mean making small top-ups to payments, even accelerated ones, by decreasing discretionary spending. For instance, you might reduce how often you eat out to come up with an extra $20 or $50 biweekly that can be paid toward your debts. Or it could mean using lump sums of money, e.g., part of a tax refund or bonus from work, to make periodic payments against the principal. Check with your lender to see what your options are, but car loans generally allow extra payments at any time.

Preparation is the key to success

Have you ever heard that preparation is the secret to success? Think of a diet — if you’ve ever been on one, when hunger hits and you’ve got nothing ready to eat, that’s when you’re most likely to cheat. The same is true for your money. When an urge to spend hits or an emergency expense needs to be paid for, if you don’t have a plan for where the money will come from, you’re likely to grab whatever is available. With unexpected expenses, it’s unfortunately usually a credit card. Relying on credit to make ends meet rather than on your own savings is a money trap that will keep you broke.

The way to escape this cycle of debt is to spend less on day-to-day expenses than you earn, and the pandemic has shown many of us how we can do that. If you’re not sure how much to set aside, start with whatever you can afford.

Draw up a budget

to firm up your numbers and then set aside money according to your plan.

Then utilize

strategies that make saving easier

. For instance, you can set up automatic transfers through your online banking on payday to stash away a predetermined amount of cash before you get a chance to spend it. Out of sight, out of mind. Ensure that you have a separate savings account or two set up to hold onto your savings. If you leave it in your chequing account, it’s bound to disappear. To

keep your saved money safe from yourself

, ask your financial institution to remove the savings accounts from your debit card.

The bottom line on sticking with good money habits

If how you’ve been managing your money until now has kept you broke and hasn’t helped you reach your goals, try something new. Question each purchase you make. Comb through your household bills to ensure they meet your needs and that you’re getting good value for what you’re spending. Switch up your routine to continually force yourself to do things differently. Improve your money skills and knowledge of personal finances by reading blogs, books or asking qualified professionals. Then, instead of trying to figure out how to make ends meet, stick with what might be the most valuable outcome of the pandemic: work towards having fewer ends.

Related reading:

Clean Up and Declutter Your Finances

A Simple Way to Keep Track of Your Money

8 Common Money Mistakes That Can Keep You Broke

Scott Hannah is president of the Credit Counselling Society, a non-profit organization. For more information about managing your money or debt, contact Scott by


, check

or call 1-888-527-8999.

Copyright Postmedia Network Inc., 2020

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