The latest forecast for the global economy shows a grim outlook of the world torn by the COVID-19 pandemic and Russia’s war against Ukraine.
Almost all countries are expected to experience slower growth in 2022-23 due to the ongoing Russia-Ukraine war, according to a recent report by the Organization for Economic Cooperation and Development (OECD).
With the ongoing Russia-Ukraine war, OECD recently lowered its estimates for global growth, slashing it to 3 per cent in 2022 from 4.5 per cent projected last year.
In 2023, the global growth is estimated to decline further to 2.75 per cent.
Current inflation across OECD countries in 2022 is 9 per cent, twice its earlier projections. The organization said that with the ongoing humanitarian crisis, high inflation could persist in rich countries and create food shortages for poorer ones. It called for global cooperation to prevent a food crisis by avoiding mistakes similar to those that led to the inequity in vaccine distribution.
“The price of this war is high and will need to be shared,” said Laurence Boone, the OECD’s chief economist.
The report said if the war continues to escalate, European economies relying heavily on Russian fuel may worsen, because alternative energy sources may not be enough or easy to ramp up.
“Governments also have to play a role through support targeted to those most vulnerable to rising food and energy inflation,” Ms. Boone said.
SO, WHERE DOES CANADA STAND?
Canada’s economy has largely recovered from the pandemic but the OECD report said the Bank of Canada should continue to raise its policy rate and shrink its balance sheet in order to return to its target inflation.
Along with income from high resource prices, a large part of the recovery, the report said, is due to its limited trade ties with economies that have been hit hard by the war in Ukraine.
Current inflation in Canada is 6.8 per cent– the highest since 1991 – but the country could follow the same path of the U.S. Federal Reserve’s aggressive rate hike last week, the largest since 1994.
OECD expects the Bank of Canada to move towards a faster policy tightening so that the domestic productive capacity is not strained by the rising demand.
The Bank of Canada has been raising interest rates to curb the impact of inflation.
In a recent speech in Montreal, Bank of Canada deputy governor Toni Gravelle said, “sharp rebound in global demand for goods, along with pandemic-related restrictions and some weather-related events, created the perfect storm.”
With growing demand, the federal and provincial governments should focus on strong resource revenues to reduce the public debt, while targeting temporary income support for households facing living-cost pressures, the report said.
In its recent Financial System Review, the Bank of Canada said the share of highly indebted households had risen.
“In Canada, elevated levels of household debt and high house prices remain two key interconnected vulnerabilities,” the bank said in its annual Financial System Review.
INCREASE IN THE POLICY RATE
Following the relaxation of containment measures in late January, Canada has seen large output gains in contact-intensive services and strong contributions from resources sectors, construction, and manufacturing.
But the report has warned about the supply chain disruptions, exacerbated by labour shortages and high inflation. The food and energy price rises are already reducing an average Canadian household’s purchasing power and will negatively impact private spending, even as saving rates return to more normal levels, according to OECD.
OECD said more rate rises from the Bank of Canada could help tame the price pressures and “bring the monetary policy to neutral settings, where it neither stimulates nor weighs on the economy.”
According to the OECD, Canada’s policy rate is projected to increase to 2.5 per cent by early 2023. In case of continuing inflation, the organization forecasted an additional increase in rates.
In June, a second increase of 50-basis points by the Bank of Canada brought the benchmark interest rate to 1.5 per cent.
“We are taking these large steps because inflation has been persistently high, the economy is overheating, and the risk that elevated inflation will become entrenched has increased,” Bank of Canada’s Deputy Governor Paul Beaudry said in his remarks.
STRONG GROWTH TO CONTINUE AMID EXTERNAL SHOCKS
OECD projects Canada’s real GDP is to grow by 3.8 per cent in 2022 and said the country can withstand the economic shocks from the Russia-Ukraine war since it has limited trade links with hard-hit economies.
OECD reported that most economies are relatively tight and are now experiencing labour shortages with a sharp rise in vacancies. Recent data from Statistics Canada showed that the job vacancies climbed to 957,500 in the first quarter, the highest quarterly number on record.
The pandemic resulted in huge declines in international migration which contributed to the labour shortages in some countries.
For Canada, OECD said higher immigration in the country will help ease these labour shortages and the wage pressures in supply-constrained industries.
Canada first to sign off on Finland, Sweden joining NATO – CTV News
Canada became the first country to ratify Finland and Sweden’s accession protocols to join the North Atlantic Treaty Organization (NATO), Prime Minister Justin Trudeau announced Tuesday.
The move follows NATO leaders officially inviting the two nations to join the alliance during a summit in Madrid last week, and brings the two countries a step closer to becoming full NATO members.
“Canada has full confidence in Finland and Sweden’s ability to integrate quickly and effectively into NATO and contribute to the Alliance’s collective defence,” Trudeau said in a statement.
“Their membership will make NATO stronger and we call on all NATO members to move swiftly to complete their ratification processes to limit opportunities for interference by adversaries.”
According to The Associated Press, all 30 NATO allies signed off on the accession protocols on Tuesday, sending the membership bids to each nation for legislative approval. Both Canada and Denmark were quick to turn around their ratification documents.
“Thank You Canada! Canada is the first country to deliver its instrument of ratification to the United States Department of State, the depository of the North Atlantic Treaty!” tweeted Sweden’s Ambassador to Canada Urban Ahlin.
In Canada, the federal government made moves domestically to move through the ratification quickly, Trudeau said. This included issuing orders-in-council authorizing Foreign Affairs Minister Melanie Joly to “take the actions necessary to ratify, on behalf of Canada.”
Ahead of Parliament adjourning for the summer, the House of Commons debated and voted on a motion signalling their support for Finland and Sweden joining NATO.
In May, the House Public Safety and National Security Committee adopted a motion expressing “strong support” for the two Scandanavian countries’ membership in the alliance. The motion also called on all NATO members to approve their applications as quickly as possible.
A debate was held on this motion on June 1, and it passed unanimously when put to a vote the following day.
“Russia’s war in Ukraine has actualized something that was once only theoretical. An authoritarian state led by an autocrat has attacked a democracy: It has demonstrated that it is willing and able to attack a democracy. It has made clear that democracies that stand alone and are not part of military alliances are most vulnerable,” said Conservative MP and foreign affairs critic Michael Chong during the House debate. “That is why it has become necessary to bring both Sweden and Finland into the NATO alliance. This is an urgent matter.”
Also taking part in the debate, NDP MP and foreign affairs critic Heather McPherson said she supports Finland and Sweden doing all they can to prevent their countries from being threatened further by Russia.
“Prior to the further invasion of Ukraine, support for NATO membership was around 20 to 30 per cent in Sweden and Finland. Now, 76 per cent of Finnish people support joining NATO. Very simply, Vladimir Putin and the aggression of the Russian Federation are responsible for escalating tensions in the region and leading Sweden and Finland to seek NATO membership,” McPherson said.
With NATO member countries having different processes for completing ratification, it could be some time still before the two nations formally become a part of the longstanding intergovernmental military alliance.
With files from Senior Political Correspondent for CTV News Channel Mike Le Couteur
Canada Day Ottawa: 12 arrested, 50 charges laid – CTV News Ottawa
Ottawa police say 50 criminal charges were laid over the Canada Day long weekend and 12 people were arrested.
Last Friday marked the first Canada Day in Ottawa with major in-person events since 2019. Thousands of tourists and residents came downtown to celebrate the holiday. In the mix were several hundred protesters associated with the “Freedom Convoy” movement that paralyzed downtown Ottawa in February.
Ottawa police were out in force starting June 29 with the implementation of the downtown vehicle control zone, which was meant to prevent another vehicle-based occupation of the city.
Police said they arrested a dozen people in downtown Ottawa between June 29 and July 3, including people who were not involved in Canada Day events or protests. On top of the 50 criminal charges, four charges under the Controlled Drugs and Substances Act were also laid.
One man was arrested on Parliament Hill June 29 for causing a disturbance. He was taken back to Toronto on an outstanding warrant.
On June 30, police charged one person with breach of release orders and Highway Traffic Act offences after a traffic stop on Highway 417 at Anderson Road.
Later that day, three people were arrested following an incident at the National War Memorial in which a police officer was allegedly choked. Charges include assaulting police, resisting arrest, causing a disturbance, and assault by choking. This incident came shortly after Canadian soldier James Topp, who is facing a court martial for criticizing the government’s COVID-19 vaccine rules in uniform, completed his cross-country walk protesting vaccine mandates. Hundreds of people had gathered at the War Memorial to hear Topp speak.
On Canada Day, one man was arrested and charged for allegedly pulling a knife on RCMP officers near LeBreton Flats after officers broke up a fight. Two more people were arrested and face several assault charges after an attack in the ByWard Market.
On July 2, police arrested two people in a vehicle and seized a handgun. Several gun and drug charges were laid. Patrol officers also seized a gun in Sandy Hill that afternoon and charged a man with drug and gun offences.
On July 3, police arrested a woman for public intoxication who allegedly spit in an officer’s face. She now also faces an assault charge.
Ottawa police did not name any of the accused.
Police are also investigating paint on public property in Strathcona Park and on Wellington Street. Protesters painted messages about convoy organizers Pat King and Tamara Lich on Wellington Street on Canada Day. Police also said earlier they laid 19 impaired driving charges over the long weekend.
Ottawa Bylaw towed 121 vehicles from the vehicle control zone between June 29 and July 3 and issued 513 parking tickets.
Foreign Affairs Minister Mélanie Joly to take part in G20 despite Russia’s presence
OTTAWA — Canada’s Foreign Affairs Minister Mélanie Joly will take part in a G20 meeting in Bali, Indonesia, this week, even though Russia’s Foreign Minister Sergey Lavrov is also expected to attend.
In March, Joly joined many others in walking out of a United Nations meeting in Geneva when Lavrov, whom Canada had brought sanctions against days earlier, began speaking.
In April, Deputy Prime Minister Chrystia Freeland joined a walkout of a G20 meeting for finance ministers and central bank governors in Washington to protest Russia’s invasion of Ukraine.
In May, International Trade Minister Mary Ng joined her counterparts from the United States, Australia, Japan and New Zealand in leaving an APEC meeting in Bangkok when the Russian representative began to speak.
Last week, Prime Minister Justin Trudeau said Canada would take part in the G20 leaders’ meeting in November, even if President Vladimir Putin goes too, saying it is important to counteract the voice that Russia will have at that table.
Joly, who recently said it was unacceptable for a Canadian official to attend a reception hosted by the Russian Embassy in Ottawa, is expected to join other foreign ministers at the G20 meeting in opposing the ongoing war in Ukraine.
This report by The Canadian Press was first published July 5, 2022.
The Canadian Press
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