If timing is everything, Calgary’s new mayor has picked an opportune moment to assume leadership of a city that’s used to economic booms and busts — and is now busy recalibrating and recovering.
If timing is everything, Calgary’s new mayor has picked an opportune moment to assume leadership of a city that’s used to economic booms and busts — and is now busy recalibrating and recovering.
Mayor Jyoti Gondek addressed more than 200 members of the local business community on Friday, delivering an upbeat, in-person message to a Calgary Chamber of Commerce luncheon.
She touted the city’s economic rebound and discussed council’s decision this week to declare a climate emergency as Calgary strives to position itself as a global hub for energy transformation research and development.
Her speech landed as the economy has turned a corner, thanks to rising commodity prices, the fourth wave of COVID-19 receding, and a recent string of promising corporate investments.
“I believe there is tremendous excitement around Calgary,” Gondek told reporters after the speech.
“I’ve seen clear signals from different groups and different places about their belief that Calgary will go into recovery very soon. The economic indicators are there.”
Indeed, they are.
Earlier this month, Amazon Web Services announced it will create a major cloud-computing hub in Calgary, planning to invest more than $4 billion in the region and create more than 900 positions across the country.
On Tuesday, a new Calgary-based discount airline was unveiled. Lynx Air said it will hire up to 450 workers over the next 12 months as it begins passenger service in early 2022.
It follows international tech giants Mphasis and Infosys , along with Royal Bank of Canada, unveiling plans to bring up to 1,800 jobs (combined) to the city in the coming years.
The recovery is broader than technology, however.
A report released Thursday by the Conference Board of Canada projects Alberta will lead the country in economic growth next year, citing a rebound in energy prices.
And Statistics Canada data released Friday shows retail sales in the province increased by 1.7 per cent in September from the prior month, powered by higher motor vehicle sales, while they shrank in the entire country.
Inflation remains high and supply chain disruptions tied to flooding in British Columbia this week are being closely watched. But the broader economic outlook entering 2022 is encouraging.
“Calgary’s economy is starting to rebound,” said chamber president Deborah Yedlin.
“It’s not going to happen overnight, but we are certainly in a better position today than we have been for quite a while.”
The chamber gathering took place as the city and province are seeing a bounce back after a historic recession last year.
The province’s GDP contracted by eight per cent in 2020 after oil prices plunged to new lows and the COVID-19 crisis saw thousands of businesses shut down and jobs disappear.
The conference board projects Alberta’s economy will grow by 5.7 per cent this year and expand by 6.1 per cent in ‘22 — well above the national average — “largely because prices for energy products and other key commodities have recovered strongly.”
In 2023, Alberta’s economic growth will slow, yet still increase by 2.9 per cent.
“We see Alberta rebounding faster, in part because it had dropped the most in the country through 2020,” Ted Mallett, the board’s director of economic forecasting, said Friday.
“I wouldn’t call it buoyant; we are talking about a recovery here.”
However, the report notes energy investments are returning to the province and drilling has picked up as oil prices have rallied. The Canadian Association of Energy Contractors says 179 rigs were active during the week of Nov. 8, up 74 per cent from the same period last year.
More investment is also flowing into renewable power projects and other clean energy developments.
Most Canadian petroleum producers are now assembling their capital budgets for 2022, although a few have been released showing modest spending hikes.
Energy Minister Sonya Savage said the province is seeing some increased investment in the oilpatch, although many companies are reticent to make larger spending commitments given the broader investment climate.
“The industry is reluctant to invest in new operations when there’s a global divestment movement underway,” Savage said.
Many Canadian oil and gas companies are still recovering from the financial damage sustained in 2020.
“Traditionally at this point in the cycle, you do see a substantial upswing in capital investment. We’ve seen a far more measured approach,” said Canadian Association of Petroleum Producers president Tim McMillan, who attended Friday’s luncheon.
“But I do expect to see more drilling.”
For the 72,000 Calgarians who were unemployed last month, the most pressing issue is when will more jobs come back?
In October, the region saw employment climb by nearly 17,000 and the jobless rate fell to eight per cent, but it’s still among the highest of Canada’s largest cities.
“Calgary is now, in terms of employment, above where we were pre-COVID,” said Charles St-Arnaud, chief economist of Alberta Central.
“We can be comfortable saying the recovery is almost completed and we will finally start the expansion, where our economy will start to get bigger — and that’s after five, six years of recovery.”
At the chamber event, Gondek talked about the importance of revitalizing the downtown and dealing with the high vacancy rate for office buildings. The mayor also spoke about council’s decision to declare a climate emergency, positioning it as an opportunity to attract investment.
“Does this make us anti-oil and gas? Absolutely not. Our energy sector is already well down this path,” she told the audience, pointing to six major oilsands producers working together to reach net-zero emissions by 2050.
“We must be leaders here, establishing our city as a centre of excellence in the energy transition economy.”
Chris Varcoe is a Calgary Herald columnist.
Afghanistan’s economy has crashed since the Taliban seized power, plunging the country into one of the world’s worst humanitarian crisis.
MAZAR-I-SHARIF, Afghanistan — Racing down the cratered highways at dawn, Mohammad Rasool knew his 9-year-old daughter was running out of time.
She had been battling pneumonia for two weeks and he had run out of cash to buy her medicine after the bank in his rural town closed. So he used his last few dollars on a taxi to Mazar-i-Sharif, a city in Afghanistan’s north, and joined an unruly mob of men clambering to get inside the last functioning bank for hundreds of miles.
Then at 3 p.m., a teller yelled at the crowd to go home: There was no cash left at the bank.
“I have the money in my account, it’s right there,” said Mr. Rasool, 56. “What will I do now?”
Three months into the Taliban’s rule, Afghanistan’s economy has all but collapsed, plunging the country into one of the world’s worst humanitarian crises. Millions of dollars of aid that once propped up the previous government has vanished, billions in state assets are frozen and economic sanctions have isolated the new government from the global banking system.
Now, Afghanistan faces a dire cash shortage that has crippled banks and businesses, sent food and fuel prices soaring, and triggered a devastating hunger crisis. Earlier this month, the World Health Organization warned that around 3.2 million children were likely to suffer from acute malnutrition in Afghanistan by the end of the year — one million of whom at risk of dying as temperatures drop.
No corner of Afghanistan has been left untouched.
In the capital, desperate families have hawked furniture on the side of the road in exchange for food. Across other major cities, public hospitals do not have the money to buy badly needed medical supplies or to pay doctors and nurses, some of who have left their posts. Rural clinics are overrun with feeble children, whose parents cannot afford food. Economic migrants have flocked to the Iranian and Pakistani borders.
As the country edges to the brink of collapse, the international community is scrambling to resolve a politically and legally fraught dilemma: How can it meet its humanitarian obligations without bolstering the new regime or putting money directly into the Taliban’s hands?
In recent weeks, the United States and the European Union have pledged to provide $1.29 billion more in aid to Afghanistan and to Afghan refugees in neighboring countries. But aid can do only so much to fend off a humanitarian catastrophe if the economy continues to crumble, economists and aid organizations warn.
“No humanitarian crisis scan be managed by humanitarian support only,” said Abdallah Al Dardari, the United Nations Development Program’s resident representative in Afghanistan. “If we lose these systems in the next few months, it will not be easy to rebuild them to serve the essential needs of the country. We are witnessing a rapid deterioration to the point of no return.”
Under the previous government, foreign aid accounted for around 45 percent of the country’s G.D.P. and funded 75 percent of the government’s budget, including health and education services.
But after the Taliban seized power, the Biden administration froze the country’s $9.5 billion in foreign reserves and stopped sending the shipments of U.S. dollars upon which Afghanistan’s central bank relied.
The scale and speed of the collapse amounts to one of the largest economic shocks any country has experienced in recent history, economists say. Last month, the International Monetary Fund warned that the economy is set to contract up to 30 percent this year.
Thousands of government employees, including doctors and teachers, have gone months without pay. The wartime economy that employed millions and propped up the private sector has come sputtering to a halt.
By the middle of next year, as much as 97 percent of the Afghan population could sink below the poverty line, according to an analysis by the United Nations Development Program. Many people who were already living hand-to-mouth have been pushed over the edge.
One October morning in Mazar-i-Sharif, dozens of men gathered downtown, carrying shovels cobbled together with rough wood and rusted metal.
For years, day laborers have gathered there to pick up work digging wells, irrigating fields of cotton and grain, or doing construction around the city. The pay was modest — a couple dollars a day — but enough to buy food for their families and pay other small bills. These days, though, the men stay at the square until sunset hoping for even one day of work a week. Most cannot even afford to buy bread during lunch.
“There was work one day — and then suddenly there wasn’t,” said Rahmad, 46, standing in the crowd. “It was so sudden I didn’t have time to plan or save money or anything.”
Even before the Taliban takeover, Afghanistan’s fragile economy was wracked by slow growth, corruption, deep poverty and a severe drought.
Afghanistan has long been dependent on imports for basic foods, fuel and manufactured goods, a lifeline that was severed after neighboring countries closed their borders during the Taliban’s military campaign this summer. Trade disruptions have since caused shortages of crucial goods, like medicine, while the collapse of financial services has strangled traders who rely on U.S. dollars and bank loans for imports.
At the Hairatan port along the Afghanistan-Uzbekistan border, a team of workers unloaded flour bags from a shipping container into trucks, sending clouds of white specks into the air. Since August, their company has slashed its imports in half; people can no longer afford basic goods.
At the same time, the cost of doing business soared. Customs and traffic officers, who have gone unpaid for months, are asking for more in bribes, according to a manager for the company, the Bashir Navid Group.
Who are the Taliban? The Taliban arose in 1994 amid the turmoil that came after the withdrawal of Soviet forces from Afghanistan in 1989. They used brutal public punishments, including floggings, amputations and mass executions, to enforce their rules. Here’s more on their origin story and their record as rulers.
“Everything is disorganized,” the manager, Mohammad Wazir Shirjan, 50, said. “Everyone is completely frustrated.”
To avoid a complete currency collapse, the Taliban limited bank withdrawals to first $200 and then $400 a week and have appealed to China, Pakistan, Qatar and Turkey to fill its budget hole, which is billions of dollars large. So far, none have offered the financial backstop that Western donors provided to the former government.
The Taliban have also pressed the United States to release its chokehold on the country’s finances or risk a famine, as well as Afghan migrants flooding into Europe in search of work.
“The humanitarian crisis we have now is the result of those frozen assets. Our people are suffering,” Ahmad Wali Haqmal, a spokesperson for the Ministry of Finance, said in an interview.
In late September, the Biden administration issued two sanctions exemptions for humanitarian organizations to ease the flow of aid, and it is considering additional adjustments, according to humanitarian officials involved in those negotiations. But those exemptions do not apply to paying employees like teachers in government-run schools and doctors in state hospitals, and the decision not to include them risks the collapse of public services and a further exodus of educated professionals from the country, humanitarians say.
And the scope of the exemptions is limited in other ways. Many foreign banks that aid organizations rely on to transfer funds into Afghanistan have cut ties to Afghan banks for fear of running afoul of sanctions. And the liquidity crisis severely restrains the amount that organizations can withdraw to pay vendors or aid workers.
“The current economic restrictions and sanctions policy, if maintained and not adjusted, are on track to hurt the Afghan people — through deprivation and famine — more than the Taliban’s brutalities and poor governance,” said John Sifton, the Asia advocacy director at Human Rights Watch.
Already in hospitals across the country are signs of a hunger crisis that could overwhelm the fragile health care system.
In a malnutrition ward of a hospital in southern Afghanistan, Shukria, 40, sat with her 1-year-old grandson, Mahtab, his mouth craned open but body too weak to let out a cry.
For weeks, the boy’s father had come home empty-handed from his mechanic shop as business dried up, and the family resorted to bread and tea for every meal. Soon his mother stopped producing milk to breastfeed, so she and Shukria supplemented his diet with milk from their family’s goat. But when they ran out of cash to buy food, they sold the animal.
“I’ve been asking this hospital to give me work,” Shukria said. “Otherwise after a week, a month, he will just end up sick and back here.”
Kiana Hayeri contributed reporting from Mazar-I-Sharif, and Yaqoob Akbary from Kandahar.
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While prices are rising all over the world, the increases are especially striking in Latin America, which has the highest inflation forecast for both this year and next.
U.S. and U.K. inflation metrics recorded multi-decade highs, while big price jumps in New Zealand led the central bank to raise interest rates for the second time in as many months. India’s economy is showing signs of strengthening, while an increase in Covid-19 infections is denting business sentiment in Germany.
Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy:
Personal spending rose in October from a month earlier by the most since March, while a closely watched inflation measure posted the largest annual increase in three decades. The figures come as some Federal Reserve officials are advocating for a faster tapering of the central bank’s asset-purchase program than initially planned.
The supply crunch that’s helped drive inflation to multi-decade highs shows some signs of easing in the U.S. -– but it’s still getting worse in Europe.
Applications for U.S. state unemployment benefits plunged last week to a level not seen since 1969, which if sustained would mark the next milestone in the labor market’s uneven recovery. However, the larger-than-expected drop was largely explained by how the government adjusts the raw data for seasonal swings.
German business confidence took another hit in November, with a new wave of Covid-19 infections looming over the economy and rising inflationary pressures threatening to weigh on manufacturing. Expectations for the next half year also worsened.
U.K. companies reported the strongest inflation in more than two decades during November, adding to pressure on the Bank of England to lift interest rates as early as this month. IHS Markit Ltd. said 63% of purchasing managers reported increased cost burdens, driving the fastest growth in an index tracking inflation since the report started in 1998.
Singapore expects gross domestic product to expand 3% to 5% next year, a slower pace than this year as its rebound from the worst of the pandemic steadies. The first official forecast for 2022 compares with about 7% this year, the Ministry of Trade and Industry said Wednesday, reflecting the impact from easing pandemic restrictions and a stabilizing global economy.
China pulled back on its already halting progress toward meeting its U.S. trade deal targets, slowing purchases of all types of goods covered by the agreement despite calls from the Biden administration for Beijing to adhere to its commitments.
Price surges are busting through policy makers’ targets in all of Latin America’s major economies, with annual inflation prints this month of 6% in Chile, 10.7% in Brazil and a whopping 52% in Argentina. Consumer prices in Mexico rose 7.05% in the first half of November from a year prior, the highest in 20 years.
India’s economy showed steady signs of strengthening in October as services, manufacturing and exports kept it on course to post the world’s fastest growth.
New Zealand’s central bank raised interest rates for the second time in two months and signaled it will need to tighten policy more quickly than previously expected to contain inflation.
©2021 Bloomberg L.P.
Hello. Today we look at how coronavirus fears are rising again after the discovery of a new variant, the state of China’s economy and concerns about the outlook for trade.
Inflation, central bank tapering, supply chain snarls, a looming fiscal cliff — they all dropped a notch on the global economy’s list of concerns Friday as the Coronavirus shot back to the top.
A new variant called B.1.1.529 has been identified in South Africa and has already spread as far as Hong Kong, where it infected two travelers in hotel quarantine. See here for more details.
Stocks, Treasury yields and oil sank while the yen jumped — all hallmarks of investors bracing for uncertain economic times.
“What was expected to be another quiet day for markets, as U.S. activity is muted, is now likely to be rife with anxiety over the new variant and its implications for economic activity going forward,” Siobhan Redford, a Johannesburg-based analyst at FirstRand Bank, told clients in a report.
For South Africa’s economy, the news is a particular body blow especially for its already shaky tourism sector, which would have been eager to welcome foreigners chasing winter sun. The European Union, U.K. and Singapore have already curbed travel.
More broadly, there will be fears the new strain could fuel outbreaks in more countries, stretching health systems, potentially evading vaccines and complicating efforts to reopen economies and borders. The concern alone could dampen the confidence of consumers and companies, which had been showing signs of picking up.
Money markets are offloading bets on central bank interest-rate hikes in a hurry, as inflation fears give way to concerns that the variant may spread globally.
If contained, the new as-yet unnamed strain may prove to be just a scare for markets. The coming days and decisions from the World Health Organization will be closely watched for any broader spread.
At a minimum, however, it’s yet another reminder that Covid-19 is going to remain the wild card for the global economy and will continue to shape the recovery and what policy makers do next.
“Each new variant entails the risk of the vaccination progress being undone,” said Ulrich Leuchtmann, head of currency strategy at Commerzbank. “The thoughts of a world post-Covid suddenly become all confused.”
China’s economy continued to slow in November with car and homes sales dropping again as the housing market crisis dragged on.
That’s the outlook from Bloomberg’s aggregate index of eight early indicators for this month. While the overall number stayed unchanged, under the surface there was a further deterioration in some of the real-time economic data.
“Faintly in the distance: the contours of a big export slump are becoming visible.”
That’s the ominous warning from HSBC’s co-head of Asian economic research Frederic Neumann in a research note. He notes that export volumes have contracted in recent months and new export orders are declining. And that’s set to continue as the shift away from goods demand towards services will knock down shipments from Asia.
“After powering through the pandemic, a trade hangover now looms,” he says.
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