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Waterloo Region economy expected to avoid recession, outpace provincial GDP



KITCHENER — Waterloo Region’s economy will avoid a recession in 2023 and outpace provincial economic activity for the year, according to a new report.

The Conference Board of Canada, an Ottawa-based think-tank, released its annual economic projections for the region this week, predicting a slowdown in the economy mostly due to national challenges including rising interest rates, a cooling housing market and the threat of a Canadian recession.

But while the region’s output is slowing, it is still expected to outpace the provincial economy.

After a red-hot 2021 and 2022, the region’s gross domestic product growth is expected to slow to 1.5 per cent in 2023, jumping back up to 3.5 per cent in 2024 and 2.4 per cent in 2025.


That’s above the projections for Ontario, with the provincial government forecasting growth around 0.5 per cent in 2023, 1.6 per cent in 2024 and 2.1 per cent in 2025.

Over the last two decades, the region has been one of the province’s economic engines, with its economy expanding faster than the province’s in 18 of the last 21 years.

“It isn’t a surprise to me that Kitchener and surrounding area is expected to outpace the provincial economy throughout our forecast,” said Robin Wiebe, an economist with the conference board who is originally from Kitchener. “It is a vibrant community with an economy with multiple sectors, and it has a history — at least over the last 21 years — of outperforming the province.”

The regional government also has a favourable projection for the area, with spokesperson Scott Cressman noting the low industrial vacancy rate, steady construction activity, and ability to draw workforce talent as reasons for optimism.


“The Region of Waterloo’s diversified economy has allowed for ongoing growth in the Waterloo Region, enabling us to be fairly optimistic about the projection,” said Cressman.

Manufacturing, which makes up 18 per cent of the region’s economy, is expected to return to pre-pandemic levels by 2024.

And while tech layoffs may temporarily hinder the region’s tech sector, continued unfilled job openings should mean local laid-off employees can quickly find new work.

“I think what this reporting is highlighting is the importance of our diverse economy,” said Art Sinclair, vice-president of the Greater Kitchener Waterloo Chamber of Commerce.

“After the early impact of the pandemic, what we’re seeing is we’re moving back to original pre-pandemic conditions, where we were a consistent economic driver of the province.”

Despite a potential slowdown in the year ahead, Sinclair said a top concern for local employers remains finding workers.

The region’s unemployment rate stood at 5.5 per cent in 2022, down considerably from 9.6 per cent in 2020 and 6.5 per cent in 2021.

It is expected to reach about 5.8 per cent in 2023.

But the report highlights other possible headwinds that could limit the projected growth for the region.

Real estate prices are forecast to continue dropping in 2023 after the frenzy between 2020 and 2022.

According to new monthly statistics from the Waterloo Region Association of Realtors, the average price for all property types in the region is to $758,698. That’s down about 25 per cent from the February 2022 peak of $1,012,930.

“That could be made worse if there is a change in direction with Toronto companies and their work-from-home models,” said Wiebe. “If there is a mass return to the office in Toronto, that could put an end to the large amounts of people fleeing the city, and cause prices to drop even further.”


The region also continues to take in a large share of new immigrants, he said, expected to fuel the region’s growth over the next three years. He expects the population will grow by 2.4 per cent in 2023, followed by 1.8 per cent in 2024 and 1.7 per cent in 2025.

“I think the one area for concern for the region is that it likely can’t keep growing forever without having some hiccups,” said Wiebe.

“They likely won’t be able to build housing quick enough to meet the population demands, and there’s also the impact on existing infrastructure and services from these increased numbers.”

There’s also one other major consideration that could upend all future regional projections.

If the country moves into a full-blown recession, he said, the region will not be immune, and the conversation could soon turn from one of optimism to one of desperation.

Key Waterloo Region economic projections:

  • The population will grow by 2.4 per cent in 2023, 1.8 per cent in 2024 and 1.7 per cent in 2025.
  • The local GDP grew by a 21-year high of 5.1 per cent in 2021 and expanded a further four per cent in 2022.
  • Forecasts indicate local GDP growth of 1.5 per cent in 2023, 3.5 per cent in 2024 and 2.4 per cent in 2025.
  • The unemployment rate will increase to 5.8 per cent in 2023 from 5.5 per cent in 2022. Both are down considerably from 9.6 per cent in 2020 and 6.5 per cent in 2021.
  • For all of 2022, employment rose by 10,700 jobs — an increase of 3.3 per cent — to a record 332,140. This followed a 2021 increase of 15,250 jobs, or five per cent.


  • Overall employment is expected to increase by one per cent in 2023, led by gains of 4,250 jobs in finance, insurance, and real estate; and 3,300 jobs in manufacturing.

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As economy faces potential recession, Liberals to release 'tricky' budget Tuesday – Financial Post



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OTTAWA — The federal Liberals are set to unveil a budget on Tuesday intended to showcase their plans to keep Canada competitive amid the clean energy transition while supporting Canadians who are struggling with affordability.

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Finance Minister Chrystia Freeland has promised to accomplish as much over the last few weeks, while also pledging to keep the budget fiscally restrained.

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But that balancing act isn’t expected to be easy. A slowing Canadian economy could weigh on government coffers.

“It’s going to be very tricky for the federal government,” said Randall Bartlett, a senior director of Canadian economics at Desjardins.

The Liberals are expected to invest considerably in Canada’s clean energy transition, in an attempt to keep Canada competitive with the United States as it launches its own aggressive measures.

The Inflation Reduction Act, signed into law last August by U.S. President Joe Biden, invests nearly US$400 billion in everything from critical minerals to battery manufacturing, electric vehicles and clean electricity, including hydrogen.

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Ottawa has also promised big bucks for health care. It recently signed 10-year funding agreements with provinces on health-care transfers, and that spending is expected to be accounted for in the budget.

And with the cost of living still a top economic issue for many Canadians, the Liberals have signalled the budget will include new affordability measures.

“In the weeks to come, for those Canadians who feel the bite of rising prices the most acutely, for our most vulnerable friends and neighbours, our government will deliver additional, targeted inflation relief,” Freeland said in Oshawa, Ont. on Monday.

But Bartlett said the federal government has to balance its big-ticket spending priorities with an uncertain economic outlook.

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Many economists are forecasting that Canada could enter a recession this year as high interest rates weigh on the economy. Since March 2022, the Bank of Canada has aggressively raised interest rates to crack down on high inflation.

As global price pressures ease and interest rates dampen spending in the economy, inflation has been slowing. Canada’s annual inflation rate has tumbled from 8.1 per cent in the summer to 5.2 per cent in February.

Even as inflation becomes less of a problem, though, a slowing economy means less government revenues to finance spending.

According to a report from Desjardins, new spending measures alone wouldn’t necessarily put federal finances on an unsustainable path. But if significant new spending is paired with a worse-than-expected economic downturn, that could spell trouble for the federal government, the report says.

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“Planning for an optimistic future and spending accordingly now could lead to very challenging circumstances going forward,” Bartlett said.

The federal government also runs the risk of fuelling inflation with excessive spending, making the Bank of Canada’s job of cooling inflation more challenging. Freeland has repeatedly said she doesn’t plan on doing that, noting the federal government can’t compensate all Canadians for the rise in prices.

Bartlett said the federal government so far has done a good job balancing the need to help low-income Canadians while avoiding adding fuel to the fire.

“My concern is this that (if) they continue to layer this on top of additional spending for other other initiatives … it’s not only going to make potentially the Bank of Canada’s job more challenging, but it’s also going to just increase the size of the deficit at a time when the economic outlook is very uncertain,” he said.

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There is some ambiguity around how the government will approach tax policy in this year’s budget.

Some policy experts have suggested that increasing tax revenues might be part of the solution when it comes to stabilizing federal finances. A shadow budget put together for the C.D. Howe Institute, an economic thinktank, recommended increasing the GST tax rate.

But Bartlett said raising taxes might be a tough sell for Canadians, especially because the federal government has had mixed results on some of its key areas of investment, such as its national housing strategy.

“If we continue to see increased spending, and that requires tax increases to to afford that spending, there’s going to be … increased scrutiny by the public on whether or not we’re getting the bang for the buck,” Bartlett said.

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On the political front, the Liberals also have to contend with New Democrat priorities as outlined in the party’s supply-and-confidence agreement with the Liberals. It agreed to support the minority government in key votes until 2025 — including on federal budgets — in exchange for movement on shared priorities.

In the upcoming budget, NDP Leader Jagmeet Singh has said he wants to see the government extend the six-month boost to the GST rebate, introduced last fall, which temporarily doubled the amount people received.

Singh has also said he’d like to see federal funding for school lunches.

Per the parties’ agreement, the Liberals have already agreed to create a federally funded and administered dental care program this year that would replace the dental benefit for children in low-income families that was rolled out in the fall.

The deal also commits the Liberals to passing legislation on a national pharmacare program by the end of 2023 — although there’s been no sign of movement on that yet.

This report by The Canadian Press was first published March 26, 2023.


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Property Sector Biggest Overhang for China Economy: Hong – Bloomberg



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Property Sector Biggest Overhang for China Economy: Hong  Bloomberg


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Prices are High: Yet Inflation has dropped to 5.2%



The Inflation rate remains relatively high at 5.2% but it has declined reasonably since the interest rates began to rock and roll upwards.

Will the decision be made to raise rates further or drop them? I believe the rates will stay where they are or go up a further point. America will be increasing its rates in an effort to quell its own inflation, and our government will follow suit as usual. A Federal election may well be announced once the inflation rate in Canada has halved itself. Interest rates will be allowed to decline and the public will show their support for the Liberals in kind.

More importantly, why are prices still extremely high while inflation continues to drop? Greed and Shrinkflation of course. Any manufacturer knows the marketplace in Canada and the US has rebounded since mid-summer 2022. Supply chain problems aside, the decline of needed products that once were earmarked for North American Markets have been redirected to China and Indian needs. This is deliberate of course, allowing those manufacturers in Asian Markets to demand higher prices. Products within the retail sector have gone up in price or the price remains the same while the product has been reduced in size. After 2020-2021, most retailers did increase their prices and realized that our markets still were prepared to purchase what was needed, so they will retain their higher prices until forced to change their pricing structure in the near future.

Has this increase in slowing the economy work? North America’s Economy has been booming since mid-summer 2022. Growth rates in the US show promise, and Canada’s Economy has benefited from the boom to the south. America’s President Biden continues to sell its America First purchasing policy putting Canada’s Liberal Government into a fear fest spin. Trump’s “make America great again has been followed by Biden’s purchase American 1st”. Federal Agencies must purchase American manufactured products and services 1st, before giving foreign firms a chance to bid. Canada’s begun to apply taxes on various products in an effort to pay down their massive public debt. Beer and most forms of booze and other items that fall into the luxury tax sector are being targeted.


Have you noticed that most media outlets have refused to offer an attitude of clarity with regard to higher prices and inflation? Why are prices so high? Most so-called specialists claim various reasons why, while others insist grocers are not making loads of money, surviving on a 2-4% profit margin.
Would it not be nice to see a media broadcaster or journalist come out with something like this…

“The Public is being taken for a ride by basically everyone within the retail-manufacturing sectors”
“It’s greed baby, with a side of massive profiteering”.

Canadian and US Corporations are taking our funds to the bank, and we are letting them do so. The public continues to buy what they want on credit while complaining all the more. And did our government demand that essential items needed by the public be made locally, and not imported from some distant land? Words with no follow-up, propaganda with no real power behind them. Instead of going after the wayward profiteering firms, our governments are canceling funding programs for the businesses most damaged by the pandemic(restaurants and Mom & Pop Stores) and also pursuing some individuals that asked for CERB. Governments are and will continue to create new taxes and tax us, while they let the wealthy hide their fortunes in banking centers throughout the world. The government is so comfortable that it will pursue a policy of taxation that strikes at the most vulnerable, our elderly, who also have within their bank accounts @ 3.2 trillion Canadian and much more in America. The average Canadian Boomer is worth @$206,000 and the government and many corporations want some of that.

Like Premier Ford said last year…Ontario is back in business. So to the taxation hikes to come.

Why do our governments allow corporations to blind us with advertising propaganda while their hands are in our pockets, robbing us blind? The very basics of foodstuff, energy demands, and housing needs are pushing many towards a credit crisis never seen before. If the public fails, so do their public governments.

Steven Kaszab
Bradford, Ontario

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