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Why immigrants should be optimistic about Canada’s economy

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On November 1, Immigration, Refugees and Citizenship Canada (IRCC) released their annual Immigration Levels Plan, which is used to guide their operations and determine the number of newcomers Canada will welcome.

This year’s target of 432,000 new permanent residents (PRs) is the highest ever in Canada’s history. The numbers for 2023 (465,000) and 2024 (485,000) will continue the upward trend of (500,000) in 2025.

The arrival of nearly 1.5 million people to Canada over the next three years will have an important impact on  Canada’s labour force and economy. In this article, we share the forecast for Canada’s jobs and housing markets, and for the nation’s overall economic and social well-being.

An aging nation

Of Canada’s nearly 39 million people, around 8 million, or roughly 21.5% of the population, are newcomers. The targets set out by the IRCC will raise that number swiftly and sharply — and according to Rebekah Young, Scotiabank’s head of Inclusion and Resilience Economics, this is a positive development.

“We have more retired people, and fewer workers in the economy,” said Young. “That’s really constraining through an economic lens.”

Welcoming newcomers, who, according to Young, tend to be younger and better educated, is one way to find the help we need — and to shift our demographics.

The good news is Canada is one of the few advanced economies with a growing population. “Because we have such expansive targets for newcomers, we actually see our population growing by around 1.8% per year,” she said.

A younger, working, educated and enlarged population in turn helps the commercial sector.

“Newcomers are also consumers. They’re buying houses or vehicles, they’re going grocery shopping or to the movies, so they’re spending in the local economy,” Young pointed out.

And, of course, newcomers are also working and paying taxes — much-needed money that may not be coming in due to a shrinking labour force.

“They’re paying into federal, provincial and municipal revenues, that are then used to provide more services to Canadians, including supporting some of the benefits that go to aging Canadians,” she said.

Nearly 1 million job vacancies

According to Statistics Canada, there were 957,500 job vacancies in Canada in the first quarter of 2022 — the highest quarterly number on record.

“Labour shortages existed prior to the pandemic, but now they’re even more amplified.”

The pressure on industry is enormous. “Business leaders are increasingly vocal about labor shortages,” she said. “There’s an understanding that this isn’t temporary, that we are going to be facing skill shortages and skills mismatches long after the pandemic is gone.”

Even with the proposed immigration numbers, Young said that there will still be job vacancies.

And what kind of workers are arriving? “There are really highly educated newcomers that will come in and fill jobs in high tech sectors, particularly given that the U.S. immigration policies have been so closed,” she said.

The benefit, according to Young, is that we have access to a pool of workers who want to “make transformative change in some of these very high-end sectors that can enhance overall productivity.”

Young shared that Canada could do a better job in fully leveraging these skills as too many university-educated newcomers are in positions that aren’t the right fit for their abilities.

At the same time, newcomers who are in the earlier stages of their careers are filling important gaps as well, “If you look at the health care sector, for example, or home care — that caring economy — there are major vacancies there that are having a very real impact on Canadians.”

Finally, there are the more intangible benefits to boosting immigration. “The entrepreneurialism and the ideas, the innovation, the different way of thinking about things,” Young said. “Economics isn’t great at capturing the value of diversity but it’s clear that there are benefits there.”

“Where could the government improve is in expediency and bureaucracy,” Young said, noting that rapid expansion, as well as pandemic changes, to various programs have led to backlogs that can be challenges for both those waiting to come to Canada and businesses looking for talent.

A hot housing market

Houses and rentals in Canada have been expensive since before the pandemic. Even after the market peaked in 2022, affordability remains an urgent concern. Adding people without adding housing will only intensify the issue.

“We’re not building houses at a tremendous pace and that’s certainly a challenge. These are government challenges,” Young said. “Clearing some of the regulatory and bureaucratic processes that impede building more supply should help. We’ve just got an expanse of land here — that really shouldn’t be the issue.”

Many Canadians have put their home-buying aspirations on pause due in some part to the recent hike in interest rates, which affects mortgages. In turn, the market has cooled, but the same trend may be adding more pressure to the already stretched rental market, which saw an annual increase of 11.1% in 2020.

Newcomers will have to consider not only which communities need their skills, but also what the cost of living and wages looks like across the country. “Toronto and Vancouver tend to be big, key centers that newcomers want to go to,” Young said, noting that there are often existing communities in larger cities which can provide a sense of stability and security. But the average home price to income ratio is fourfold what it is in some other smaller cities across the country. Newcomers will be making that calculation.”

The longer-term picture may be brighter. Included in the 2022 Budget are several proposals by the Department of Finance to increase housing construction, support affordable housing and protect buyers and renters.

Canada on pause

Experts are warning of global recession, which begs the question of how newcomers and Canada as a whole might fare. According to Young, the outcome might not be as dire as in other parts of the world.

“We expect Canada to lead the pack over the course of the next couple quarters and in the next couple of years,” she said. “Canada has many more positives on the economic front than we think. It’s definitely going to feel the pains of a global slowdown. But we would categorize it in our best guess more as a pause – or a short and shallow slowdown – vs. a deep and prolonged contraction of the economy.”

Among the factors making the Canadian economy resilient, Young cited job markets, and noted that “there isn’t a better place to weather the downturn than in Canada.” She also underscored the value of well-governed and stable institutions that contribute to the resilience in the economy.

Between now and 2025, newcomers will bring Canada some much-needed relief to the desperate labour force, filling important jobs and taking some of the fiscal pressure off a nation that must now find resources for the care of a rapidly aging population. The influx of skills, ideas and entrepreneurialism will benefit employers across sectors, and promises to boost our economy on the world stage.

And these benefits aren’t temporary. The success of newcomers to Canada leads to the success of their children and to the country.

“There are long term dividends of newcomers coming, settling with family and ensuring that the second generation thrives and continues to revitalize the outlook for Canada,” Young said.

Legal Disclaimer: This article is provided for information purposes only. It is not to be relied upon as financial, tax or investment advice or guarantees about the future, nor should it be considered a recommendation to buy or sell. Information contained in this article, including information relating to interest rates, market conditions, tax rules, and other investment factors are subject to change without notice and The Bank of Nova Scotia is not responsible to update this information. All third party sources are believed to be accurate and reliable as of the date of publication and The Bank of Nova Scotia does not guarantee its accuracy or reliability. Readers should consult their own professional advisor for specific financial, investment and/or tax advice tailored to their needs to ensure that individual circumstances are considered properly and action is taken based on the latest available information.

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Securing good jobs, clean air, and a strong economy – Prime Minister of Canada

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Autoworkers have been a keystone of the Canadian economy for generations. By investing in the future of the auto industry, we are not only securing good middle-class jobs, we are fighting climate change, and building an economy that works for generations to come. 

Since January alone, Canada has secured several historic manufacturing deals for electric vehicles (EVs), hybrids, and batteries – deals that will create and secure thousands of good, middle-class jobs and provide the world with clean vehicles. Today, we are seeing the results of one of those deals start to roll off the line.

The Prime Minister, Justin Trudeau, was joined today by Premier of Ontario, Doug Ford, to open Canada’s first full-scale EV manufacturing plant, General Motors of Canada Company’s (GM) CAMI assembly plant in Ingersoll, Ontario. Starting today and going forward, the plant will build fully electric delivery vans – the BrightDrop Zevo 600 – which will help cut pollution and keep our communities healthy for our children and grandchildren.

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Thanks in part to a $259 million investment from the Government of Canada, GM’s CAMI assembly plant was able to retool its operations to build these electric vans. By 2025, the plant plans to manufacture 50,000 EVs per year. This investment has helped secure thousands of well-paying, high-quality jobs across GM facilities, and is helping advance the electrification of Canada’s automotive sector.

The Government of Canada will continue to work to attract investment from companies around the world as we build our EV supply chain – from mining critical minerals to manufacturing batteries, and vehicles. By taking action today, we are positioning Canada as a global leader in EVs, fighting climate change, securing good jobs, and building an economy that works for all Canadians – now and into the future.

Quotes

“When we invested in GM’s project to build Canada’s first full-scale electric vehicle manufacturing plant in Ingersoll, we knew it would deliver results. Today, as the first BrightDrop van rolls off the line, that’s exactly what we’re seeing. This plant has secured good jobs for workers, it is positioning Canada as a leader on EVs, and will help cut pollution. Good jobs, clean air, and a strong economy – together, that’s the future we can build.”

The Rt. Hon. Justin Trudeau, Prime Minister of Canada

“Today is proof that our historic investments in EV manufacturing are paying off. With the first BrightDrop vans coming off the assembly line, we’re seeing the skill of Canadian workers making a huge difference as the world moves to EVs. Our government, in partnership with GM, is cementing Canada’s leadership in the EV supply chain.”

The Hon. François-Philippe Champagne, Minister of Innovation, Science and Industry

“This milestone represents GM at our best – fast, flexible and first in the industry. The BrightDrop Zevo is a prime example of GM’s flexible Ultium EV architecture, which is allowing us to quickly launch a full range of electric vehicles for our customers. And, as of today, I am proud to call the CAMI EV Assembly team the first full-scale all-electric manufacturing team in Canada.”

Mark Reuss, President, General Motors

“This is a very exciting moment – a revolution in the way we transport people and goods. Today marks a huge day for BrightDrop, as we expand our footprint and begin producing the Zevo electric vans at scale, and a huge milestone for Canada on the road to a brighter future. Opening the CAMI plant is a major step in providing EVs at scale and delivering real results to the world’s biggest brands, like DHL Express, who will be our first Canadian customer.”

Travis Katz, President and CEO, BrightDrop

Quick Facts

  • The Government of Canada’s $259 million investment supports GM’s more than $2 billion project to reignite production at its Oshawa assembly plant, after operations stopped in 2019, and transform its CAMI assembly plant in Ingersoll.
  • The investment is being made through both the Strategic Innovation Fund and its Net Zero Accelerator Initiative.
  • The Government of Ontario made a matching contribution of up to $259 million toward the project.
  • Founded in 1918, General Motors of Canada Company (GM) is one of the largest automotive manufacturers worldwide. It is headquartered in Oshawa, Ontario, and is one of Canada’s largest automotive manufacturers.
  • GM is planning to introduce 30 new electric vehicles by 2025, eliminate tailpipe emissions from new light-duty vehicles by 2035, and become carbon neutral in its global products and operations by 2040.
  • The automotive sector contributes $16 billion to Canada’s gross domestic product and is one of the country’s largest export industries.
  • The automotive sector supports the employment of nearly 500,000 Canadians.
  • The 2030 Emissions Reductions Plan, released in March, puts Canada on track to achieving our goal of cutting emissions by 40 to 45 per cent below 2005 levels by 2030 while continuing to build a strong economy.
  • To make zero-emission vehicles more affordable and accessible, the Government of Canada offers incentives of up to $5,000 off the purchase or lease of a light-duty zero-emission vehicle through the Incentives for Zero-Emission Vehicles (iZEV) Program. Since May 2019, close to 176,000 Canadians have taken advantage of this program.
  • Since 2015, the Government of Canada has invested $400 million in building approximately 35,000 zero-emission vehicle charging stations across the country.

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UK's Economy To Dip Into Recession This Winter – OilPrice.com

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UK’s Economy To Dip Into Recession This Winter | OilPrice.com

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City A.M

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CityAM.com is the online presence of City A.M., London’s first free daily business newspaper. Both platforms cover financial and business news as well as sport and…

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Recession

The UK’s recession will officially begin this winter and is likely to last for most of next year, a closely watched survey out today suggests.

S&P Global and the Chartered Institute of Procurement and Supply’s (CIPS) final purchasing managers’ index (PMI) measuring private sector activity in November was unchanged at 48.2, the lowest number since January 2021 when the UK was in the constrained by tough pandemic lockdowns.

The reading was below analysts’ expectations but held steady from an earlier estimate. The services PMI was unchanged at 48.8. Services firms generate about two thirds of UK GDP.

The figure prompted experts to predict the forewarned recession will start during the final weeks of this year. 

A recession is typically defined as two consecutive quarters of contraction. The UK economy shrank 0.2 percent over the summer.

PMI has slid this year

Source: S&P Global

Britain’s PMI has now been below the 50 point threshold that separates growth and contraction for four months now, indicating consumers and businesses started cutting spending during the summer when the cost of living crisis gathered pace.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said Britain is now in the teeth of the worst economic slowdown outside the Covid-19 pandemic since the financial crisis in 2008.

The economy is being spiked by the worst inflation crunch in 41 years, with prices rising 11.1 percent over the year to October.

Pay is failing to keep pace with inflation, putting households on track for the biggest living standards shock on record. The Office for Budget Responsibility reckons real incomes will fall 7.1 percent over the next two years.

That living standards squeeze is expected to drive a spending slowdown, keeping the UK in recession for at least a year. However, experts think the amount of GDP lost during the slump will be small compared to past recessions.

Businesses are being squeezed by soaring energy costs, forcing them to scale back unprofitable activity.

Gabriella Dickens, senior UK economist at consultancy Pantheon Macroeconomics, thinks businesses will have to shed workers to offset weaker spending.

“Firms will move decisively to reduce employment next year, as they are forced to consolidate costs in the face of higher financing costs and weaker demand,” she said.

The pound slumped 0.34 percent against the US dollar on the news. The FTSE 100 climbed 0.24 percent.

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B.C.’s economy forecast to remain steady, despite slower near-term economic growth | BC Gov News – BC Gov News

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Like other jurisdictions, B.C. is expected to see slower economic growth through 2023 because of global inflation and higher interest rates, before steady growth resumes in the medium term, according to projections from private-sector forecasters.

Each year, B.C.’s finance minister meets with the Economic Forecast Council (EFC), a 13-member council of private-sector forecasters from throughout Canada, in preparation for the next year’s budget. This is the second year that an additional set of discussions was added, providing an opportunity to consult with an Environmental, Social and Governance (ESG) Advisory Council to explore how the provincial government can continue to build a more inclusive, sustainable economy and support well-being in British Columbia.

The EFC anticipates the province’s economy will grow by 2.9% in 2022 and 0.4% in 2023; slower than their January 2022 forecasts of 4.2% and 2.7%, respectively. The updated figures are similar to what was presented in the Province’s Second Quarterly Report. Real gross domestic product (GDP) growth is then expected to pick up, with an increase of 1.6% in 2024, followed by gains of 2.3%, 2.3% and 2.1% in 2025, 2026 and 2027, respectively. The reduction in the near-term outlook is consistent with other jurisdictions and reflects persistent global inflation and interest rates rising higher and more rapidly than expected throughout Canada.

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“We’re entering this period of slower growth and challenging global economic times in a strong position to continue supporting people, because B.C.’s economy grew more than most last year,” said Selina Robinson, Minister of Finance. “We’ll use the resources we have to address the issues that matter most to people, including housing, health care and building a sustainable economy that works for everyone – but no matter what is on the horizon and no matter what the numbers show, this government will continue to be here to support people.”

Discussions with the EFC and the ESG Advisory Council focused on current events, issues affecting B.C.’s economy and the environmental, social and governance opportunities and challenges facing the province. Topics at the meetings included:

  • global inflation and monetary policy impacts;
  • government policies to stimulate investment and ensure shared prosperity;
  • socioeconomic factors in B.C., such as inequality, Indigenous partnerships, and well-being;
  • environment, climate change and the transition to a lower carbon economy;
  • housing affordability and supply;
  • labour market dynamics and immigration; and
  • opportunities for businesses to build on B.C.’s strong ESG profile.

“We are committed to building an inclusive economy, where environmental and social sustainability is the basis for future growth,” said Robinson. “A strong social, cultural and economic foundation is key to successful and resilient communities. We know this, and we know generations will benefit from the decisions we make right now.”

Forecasts and feedback from the two councils will be used to inform the next provincial budget, which will be released on Feb. 28, 2023. EFC members will also have an opportunity to submit revised forecasts in early January.

Quick Facts:

  • In the Province’s Second Quarterly Report, B.C. projected a revised operating surplus of $5.7 billion in the 2022-23 fiscal year.
  • Since the summer, B.C. has rolled out approximately $2 billion in affordability measures.
  • Environmental, Social and Governance are three main categories often discussed when evaluating sustainability performance, risk-mitigation planning and societal well-being.

Learn More:

To read B.C.’s Second Quarterly Report, visit: https://www2.gov.bc.ca/gov/content/governments/finances/reports/quarterly-reports

For information about new and existing support measures for B.C. residents, visit: https://strongerbc.gov.bc.ca/cost-of-living/

For more about the StrongerBC Economic Plan, visit: https://strongerbc.gov.bc.ca/plan/

To learn about the ways B.C. is committed to environmental, social and governance principles, read the ESG summary report here: https://www2.gov.bc.ca/assets/gov/british-columbians-our-governments/government-finances/debt-management/bc-esg-report.pdf

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