This story is part of The COVID Economy, a CBC News series looking at how the uncertainty of the coronavirus pandemic is affecting jobs, manufacturing and business in regions across Canada.
It’s become cliché to describe Manitoba’s economy as diverse, but that’s what is giving Manitobans solace as the province’s economy is put through the wringer in a global pandemic
An assorted blend of industries from agriculture to manufacturing and transportation have previously cushioned the middle province from the economic blows of provinces more vulnerable to the whims of single industries, such as oil.
And that economic track record has given officials the belief they can weather the financial toll of COVID-19.
Premier Brian Pallister has clung to economic forecasts carrying the same optimism, citing one model last week from RBC that predicted Manitoba’s gross domestic product would collapse — but not as badly as any other province.
“We are projected by most of the analysts, whether in banks or bond rating companies, to be the province that is best positioned to come back from this pandemic, and we are going to make that happen,” Pallister said on Tuesday.
Forecasters not confident
One economist behind the RBC forecast, however, suggests that provincial rankings are nearly meaningless.
“I think we’re starting to split hairs here,” said senior economist Robert Hogue, whose report pegs Manitoba’s GDP as dropping 3.7 per cent this year, compared to a 1.1 per cent increase in 2019. Still, he projects Manitoba’s economy will perform better relative to other provinces due to its diversification.
Hogue said the grim picture demonstrates how quickly the economy collapsed in the month since officials urged isolation to quell the spread of COVID-19.
All non-essential businesses have been closed for three weeks and counting, while 60,000 people are believed to have filed for employment insurance, finance minister Scott Fielding said. The province said in a background document last week 26.7 per cent of the labour market is either temporarily laid off or unemployed.
The question now is whether Manitoba’s previously steady-as-she-goes economy can withstand an economic shock more unsettling than any downturn since the Great Depression.
It can in the short term, says University of Winnipeg economics professor Phil Cyrenne, while the province has a higher proportion of employees in goods-producing businesses and the public sector.
“But in the long-term, you need to have a vibrant private sector.”
Manitoba’s economy began to slow down in mid-March, shortly after the first confirmed case of COVID-19 on March 12.
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Buoyed by lower case numbers than less populated provinces like Saskatchewan and Nova Scotia, Pallister says he wants to be the first province to safely reopen the economy.
But the toll of the shutdown will be significant even if it is short, Cyrenne said.
He wonders if private businesses, especially in the battered restaurant and hospitality industries, can survive, and worries whether civil servants will lose work as an austerity-minded province teases layoffs.
Have-not province wants Ottawa’s aid
And he questions if a have-not province like Manitoba will face shrinking transfer payments from the federal government. Cyrenne mused Ottawa may cut transfers, the way it did in the 1990s, to control spiralling costs.
“That whole system, I think, is going to be in jeopardy — or at least there’s going to be lots of strains on it going forward.”
The Progressive Conservative government under Pallister spent its initial four years in government striving to whittle down its deficit from $850 million to an estimated $220 million by the end of this fiscal year.
It has pushed austerity during the pandemic, as well, relying on the federal government to provide financial aid for struggling individuals and businesses, while calling on provincial departments and public-funded bodies to cut non-essential costs.
The province is now expecting a year-end deficit as high as $5 billion due to a combination of soaring health-care costs and slumping revenues amid the pandemic.
Stephen Dodds, another economist from the University of Winnipeg, said a diverse economy alone doesn’t make Manitoba immune to financial woes.
“We’re going to need support from different levels of government, specifically the federal government, to allow us to do the borrowing we need to do to support our public services and get us through this crisis in the short term,” he said.
The province, though, has been reluctant to borrow, with Pallister saying on Monday, “We can’t just borrow our way out of this mess.”
His government has threatened layoffs if Ottawa doesn’t agree to let civil servants on reduced hours collect employment insurance. So far, the federal government isn’t willing to pick up that tab.
“I think Manitoba does face some pretty serious kind of short-term fiscal pressures,” Dodds said.
The Conference Board of Canada, which forecasts Manitoba’s economy will contract by 3.9 per cent this year, attributes the province’s economy downgrade, in part, to declines in transportation equipment manufacturing.
As one example, Dodds referenced bus manufacturer NFI Group Inc. permanently laying off 300 employees and temporarily halting production at its facilities, leaving at least hundreds more people without work for the time being.
Other big Manitoba employers have cut staff: Winnipeg-based Dufresne Furniture and Appliances has temporarily laid off 1,000 employees across several provinces, and Palliser Furniture let go of 500 Winnipeg staff in the short-term.
“Whether you serve your domestic market or an international market, we’ve seen demand really drop off a cliff,” said Conference Board of Canada economist Alicia Macdonald.
Ron Koslowsky, vice-president of the Manitoba division of the Canadian Manufacturers and Exporters, said the manufacturing sector is “surprisingly still holding its own.”
Food production is booming, and dozens of manufacturers have pivoted to making personal protective equipment for the health care field, he said, but depressed demand for transport and aerospace manufacturing is unmistakable.
“There’s no question that some [companies] will be altered,” Koslowsky said. “Some may not be around, although I don’t think they’ll be that many, unless things really tank.”
Manitoba Finance Minister Scott Fielding said he’s encouraged the province is moving toward loosening business restrictions after repeated days of few, or no, new cases of COVID-19.
It doesn’t mean the recovery, or the road to get there, will be painless, he said.
“Listen, I don’t want to sugar-coat this and say somehow this is going to be easy for anyone,” Fielding said in an interview.
“When you have the amount of people, the businesses that are completely shut down or partially shut down, the unemployment rate … it’s going to be some tough times for Manitobans, and really all Canadians,” he said.
Fielding also mentioned Manitoba’s diversified economy, and his hope in a financial system that has evaded the economic busts, but also the booms.
Trudeau to offer premiers billions to help reopen the economy safely – CTV News
Prime Minister Justin Trudeau is to offer premiers billions in federal funding to help them safely reopen provincial and territorial economies without triggering an explosive second wave of COVID-19 cases.
Trudeau is expected to present the offer to premiers during their weekly conference call today — the twelfth such call since the pandemic sent the country into lockdown in mid-March.
Precise details, including how to allocate each province’s share of the cash, are to be negotiated in the coming days, but federal officials hope agreements can be reached quickly to get the money flowing fast.
The offer comes with some strings attached, according to federal officials who spoke on condition of anonymity because they were not authorized to discuss it publicly.
Trudeau is offering to transfer the money to provincial and territorial governments, provided they agree to spend it on a number of areas the federal government considers necessary to reduce the risk of a second surge of the deadly coronavirus.
They include testing, contact tracing, personal protective equipment, bolstering municipalities, helping the most vulnerable Canadians and strengthening the health care system, possibly including improving conditions in long-term care homes linked to more than 80 per cent of the deaths in Canada so far.
Making a difference in just one of those areas — municipalities — is a pricey proposition. The Federation of Canadian Municipalities estimates communities across the country, which have been on the front lines of the pandemic, need $10-15 billion to make up for the loss of revenue resulting from reduced transit fares, user fees and deferred property taxes.
At the start of the pandemic, the federal government boosted transfer payments to provinces and territories for health care by $500 million — an amount that seemed large at the time but which has since paled in comparison with the more than $150 billion Ottawa has shovelled into direct financial aid to Canadians and economic stimulus measures.
While Trudeau is now offering provinces and territories substantially more money, there is likely to be some push back from some premiers over his attempt to direct the general areas on which it should be spent rather than letting them spend it as they see fit.
The prime minister is also expected to announce financial support for nearly four million disabled Canadians, who already faced some of the highest costs of living before the pandemic made daily life even more expensive.
Among other things, the pandemic has resulted in many people with disabilities having to rely on in-home care, pay delivery fees for groceries and other items, and fork out higher dispensing fees for prescription drugs.
This report by The Canadian Press was first published June 5, 2020.
BoC eyeing supply, consumer demand for July economic outlook, deputy says – BNNBloomberg.ca
OTTAWA — A senior official at the Bank of Canada says the central bank will be paying close attention to what the post-pandemic economy can supply and what consumers demand.
Deputy governor Toni Gravelle said Thursday it’s possible that supply could recover faster than demand if businesses reopen quickly while consumers remain cautious.
In a speech by video conference to the Greater Sudbury Chamber of Commerce, he said it will be key for the bank’s governing council to understand how the pandemic has affected demand, employment and the economy’s capacity to produce goods and services by its next interest rate decision in mid-July.
At that time, the bank will also release an updated economic outlook.
The Bank of Canada held its key policy rate at 0.25 per cent on Wednesday, but said the economy appears to have avoided a worst-case scenario due to the COVID-19 pandemic.
Gravelle made clear that’s as low as the bank believes the rate can go before it causes problems in markets, a nod toward talk about negative interest rates to spur spending.
The bank also reduced some of its market operations after it “cranked up the volume to 11” to allow the banking system to tap directly into much-needed funding liquidity, Gravelle said.
“Despite the positive signs, though, many risks and uncertainties remain,” Gravelle said, according to a text of his speech released by the bank.
“A lot will depend on whether we as a country are successful in managing the risk of possible future waves of COVID-19, and the pace at which containment measures are lifted. This applies to the global economy as well as Canada’s.”
He said the bank will pay close attention to how the pandemic is affecting growth and demand in key markets for Canadian exports.
Statistics Canada said the domestic economy shrank by 2.1 per cent in the first three months of the year. The Bank of Canada now expects output to drop a further 10 to 20 per cent in the second quarter, which is below its April expectations of a 15 to 30 per cent drop.
As bad as that sounds, Gravelle said, it would be closer to the best-case scenario the bank envisioned in April.
Gravelle pointed in his speech to silver linings in otherwise gloomy economic data.
Statistics Canada jobs figures showed that three million workers became unemployed over March and April as the pandemic took hold, but 43 per cent said they expected to return to their jobs once the pandemic passes. Gravelle said that figure was 15 per cent during the global financial crisis over a decade ago.
“These are all sort of subtle indications,” he said during a media teleconference following the speech.
“It was just more of a hopeful sign that the attachment rate of these employees will be stronger in this crisis or this environment than it was in 2008-2009.”
Inflation has dropped close to zero, driven mainly by plunging gasoline prices, and Gravelle said inflation will remain below the bank’s two per cent target in the near-term due to temporary factors.
Despite the positive tone of the speech, it’s clear no one at the central bank is breathing a sigh of relief just yet, said TD senior economist Brian DePratto.
“The multiple references to its ability to provide further stimulus, and the reiterated goal of keeping asset purchases running until the bank is certain the economic recovery is well underway make it clear that the foot will be firmly on the accelerator for some time to come,” he wrote in a note.
How does Canada save its economy? | The Star – Toronto Star
Canada’s economic numbers are staggering, for all the wrong reasons. In the span of two months, more than three million Canadians have lost their jobs and another 2.5 million have had their work hours reduced. Unemployment has soared to 13 per cent as businesses and corporations have taken on mass layoffs.
A record number of Canadians are turning to government aid to keep their families and businesses afloat. Meanwhile, the GDP is shrinking at a record rate, at levels unseen in more than a decade. Many economists say a plunge of this severity is comparable to the Great Depression of the 1930s. In short: Canada, along with many parts of the world, have seen its economies devastated during the pandemic.
But where is the bottom? Have we seen the worst of it or is there more bad news to come?
Jim Stanford, economist and director of the Centre for Future Work, talks to Adrian Cheung about the big picture of Canada’s economy, why re-opening too quickly could lead to further disaster and ideas on how we can begin recovering financially from this mess.
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