SIX MONTHS into the pandemic, short-term forecasts of the global economy are looking slightly less gloomy. But the long-term outlook remains bleak. In its latest World Economic Outlook, published on October 13th, the IMF has revised up its expectations for global growth in 2020, to -4.4% from -4.9% in its previous update in June. However, growth in 2021 is expected to be slightly less buoyant. And the fund warns that the recovery is likely to be “long, uneven, and uncertain”.
The picture still looks much worse than it did in the spring, when the pandemic first peaked across much of the world (see chart). Most large countries are forecast to suffer deep recessions this year, ranging from a contraction of 4% in America to nearly 10% in Britain. That is around twice as deep as the downturns suffered in 2009, in the aftermath of the global financial crisis. Among the biggest economies, only China is expected to actually grow this year—and only by a paltry 1.9%. India, which in April was forecast to grow by 1.9% in 2020, is now expected to shrink by 10.3%.
Just as some patients suffer from long-lasting effects of covid-19, the global economy too will suffer enduring harm. The IMF reckons that, even by 2025, global GDP per person will be lower than had been expected at the start of the year. Poor countries will fall furthest behind. Five years from now, global growth is expected to be 4.7%, nearly a full percentage point lower than the average rate in 2000-19.
The IMF attributes this lasting damage to several factors. The structure of the global economy is likely to shift as a result of the pandemic: consumers’ shopping habits will change; workplaces will need to adapt to social-distancing rules; tourism may not fully revive. Reallocating labour and capital from shrinking industries towards growing ones will take time. High unemployment and a rise in bankruptcies will also have scarring effects, further slowing the recovery. Long covid seems as much an economic problem as a public-health one.
OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.
However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.
The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.
Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.
The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.
The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.
This report by The Canadian Press was first published Oct. 17, 2024.
OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.
In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.
The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.
Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.
In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.
It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.
This report by The Canadian Press was first published Oct 16, 2024.
OTTAWA – Statistics Canada says manufacturing sales in August fell to their lowest level since January 2022 as sales in the primary metal and petroleum and coal product subsectors fell.
The agency says manufacturing sales fell 1.3 per cent to $69.4 billion in August, after rising 1.1 per cent in July.
The drop came as sales in the primary metal subsector dropped 6.4 per cent to $5.3 billion in August, on lower prices and lower volumes.
Sales in the petroleum and coal product subsector fell 3.7 per cent to $7.8 billion in August on lower prices.
Meanwhile, sales of aerospace products and parts rose 7.3 per cent to $2.7 billion in August and wood product sales increased 3.8 per cent to $3.1 billion.
Overall manufacturing sales in constant dollars fell 0.8 per cent in August.
This report by The Canadian Press was first published Oct. 16, 2024.
