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.
“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.
OTTAWA – The federal government is expected to boost the minimum hourly wage that must be paid to temporary foreign workers in the high-wage stream as a way to encourage employers to hire more Canadian staff.
Under the current program’s high-wage labour market impact assessment (LMIA) stream, an employer must pay at least the median income in their province to qualify for a permit. A government official, who The Canadian Press is not naming because they are not authorized to speak publicly about the change, said Employment Minister Randy Boissonnault will announce Tuesday that the threshold will increase to 20 per cent above the provincial median hourly wage.
The change is scheduled to come into force on Nov. 8.
As with previous changes to the Temporary Foreign Worker program, the government’s goal is to encourage employers to hire more Canadian workers. The Liberal government has faced criticism for increasing the number of temporary residents allowed into Canada, which many have linked to housing shortages and a higher cost of living.
The program has also come under fire for allegations of mistreatment of workers.
A LMIA is required for an employer to hire a temporary foreign worker, and is used to demonstrate there aren’t enough Canadian workers to fill the positions they are filling.
In Ontario, the median hourly wage is $28.39 for the high-wage bracket, so once the change takes effect an employer will need to pay at least $34.07 per hour.
The government official estimates this change will affect up to 34,000 workers under the LMIA high-wage stream. Existing work permits will not be affected, but the official said the planned change will affect their renewals.
According to public data from Immigration, Refugees and Citizenship Canada, 183,820 temporary foreign worker permits became effective in 2023. That was up from 98,025 in 2019 — an 88 per cent increase.
The upcoming change is the latest in a series of moves to tighten eligibility rules in order to limit temporary residents, including international students and foreign workers. Those changes include imposing caps on the percentage of low-wage foreign workers in some sectors and ending permits in metropolitan areas with high unemployment rates.
Temporary foreign workers in the agriculture sector are not affected by past rule changes.
This report by The Canadian Press was first published Oct. 21, 2024.
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.
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