As Canadians await word on when COVID-19 vaccine distribution will begin within their borders, those celebrating Christmas this year might find stockings stuffed with envy while observing rollouts in other nations.
Canada does not have any manufacturing capacity for the mRNA vaccines – a new technology for vaccine development – that have been garnering recent attention for their high rates of efficacy.
So should British Columbians and other Canadians temper expectations of an economic rebound against other countries that will begin vaccinating sooner?
“I’m a bit of an optimist now,” said Ken Peacock, chief economist for the Business Council of BC.
His opinion on the potential for economic recovery has been shifting mostly over the past month as economic data has shown a sharp uptick in growth after initial lockdowns in the spring.
Statistics Canada data released December 1 revealed record annualized GDP growth of 40.5% during the third quarter, and October employment numbers show the national unemployment rate has fallen to 8.9% from the 2020 high of 13.7% back in May.
But Peacock said much of his optimism is not necessarily for 2021, but for 2022-24 , when vaccines are expected to be in wide distribution across Canada.
Ottawa has secured or is in the midst of securing 429 million vaccine doses from seven companies.
For the country with a population of 38 million, it may look like overkill but Prime Minister Justin Trudeau has said it was a measure meant to mitigate potential logistical problems if some vaccines don’t work out.
The feds began locking down those deals in August, when a joint Canada-China vaccine collaboration collapsed.
That left other countries in a better position to secure agreements with the U.S. set to vaccinate as many as 20 million Americans in December.
Public Services and Procurement Minister Anita Anand told reporters this month Canada’s “delivery window” for vaccines is by the end of 2021’s first quarter.
That would give the U.S. and other countries with prioritized access to a vaccine a potential multi-month head start on reopening their economies on a wider scale than Canada.
But there’s a solid chance Canada won’t be trailing those other countries in terms of an economic rebound, according to Peacock.
“The stimulus is really significant – it really is,” he said, referring to the federal government’s $381 billion deficit and plans to deliver as much as $100 billion in more spending over three years.
Peacock said whatever advantage other countries with better access to vaccines would likely be mitigated by the fact Canada is spending more per-capita to keep the economy afloat.
He also noted that the way vaccine distribution is likely to be staggered in different countries – frontline workers first, then the most vulnerable and so on down the line – that the advantage other countries may initially have over Canada may ultimately be somewhat negligible.
Economists at CIBC now peg B.C.’s real GDP growth in 2021 at 4.1% after an estimated 5.4% decline this year.
That’s above national growth projections of 4.4% next year after an estimated decline of 5.5% in 2021.
But an economic rebound won’t be evenly distributed across sectors.
CIBC senior economist Andrew Grantham noted in a November 24 outlook that B.C. has a much greater reliance on the tourism and hospitality industry than Canada as a whole.
“Even though inter-region travel has been allowed, the deep pockets of Chinese and U.S. travellers have been missed by hotels and restaurants in the area. While a vaccine or, at the least, faster COVID-19 tests by mid-2021, could see a rebound in domestic travel next year, a big return of those international visitors is likely a 2022 story,” he said.
RBC economist Colin Guldimann said in a note he expects government supports, outlined in a fiscal update presented November 30 by federal Finance Minister Chrystia Freeland, to target transportation, tourism and the energy sectors as they “are likely to continue feeling a squeeze even after a vaccine is widely distributed.”
But are other industries at risk of losing a competitive advantage if vaccination distribution lags behind in Canada?
Since film and TV productions began slowly resuming in B.C. over the summer, the province has benefited from some Hollywood projects moving north where the pandemic is under better control.
Service work for foreign productions accounted for $2.82 billion out of the $3.4 billion of B.C. film and TV production volume generated during the 2018-19 fiscal year, according to the Canadian Media Producer Association’s Profile 2019 report.
And Peacock said he doesn’t see B.C.’s edge in the film and TV sector dissipating even if a vaccine is widely distributed in competing American jurisdictions.
“We just have so much momentum, and capacity, and the same time zone [as Los Angeles]. People just like this location,” he said.
“We might just come out the other side of this in reasonably good shape.” •
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
