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Economy

Young Canadians pessimistic about economy in 2023: survey

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Young Canadians are increasingly pessimistic about Canada’s economic situation compared to a year ago and are more willing to stay in their current jobs than leave, a recent survey from Leger shows.

The results are part of Leger’s latest Youth Study Report, released Thursday, which asked 3,007 Canadians between the ages of 15 and 39 questions about finances, the future and employment.

“Whether realistic or cynical, they are nervous about the future and prefer to live in the moment,” the report says. “They do not trust traditional institutions to make things better; rather, they prefer to embody change locally.”

The survey, conducted between Sept. 27 and Oct. 11, found 74 per cent of Generation Z and millennial Canadians do not believe the country’s economic situation will improve in the following year, compared to 66 per cent of those polled in 2021.

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Seventy-three per cent say they also don’t believe Canada’s political situation will get better in 2023, down from 77 per cent in the last survey.

Meanwhile, 78 per cent don’t believe the current situation with the environment will improve, down slightly from 79 per cent in 2021.

The survey also asked respondents questions about their overall happiness, with 67 per cent saying they feel generally happy in life compared to 23 per cent who disagreed.

More young Canadians, 26 per cent, also say they have experienced significant depression, up from 21 per cent in 2021.

FINANCES

Asked about their personal finances, 22 per cent of young people considered them to be in good shape, compared to 47 per cent who said they were normal and 28 per cent who described them as poor.

“Quite pessimistic about the state of the financial markets and their access to property, young people adapt their behaviour according to soaring inflation,” the report states.

“Faced with these uncertainties about their future, we are seeing a return to financial prudence for many of them.”

Forty-four per cent said they were living paycheque to paycheque, about one-third expect to be richer than their parents and 24 per cent do not have any investments.

Of those surveyed who are homeowners, 42 per cent said their mortgage takes up too much of their expenses.

Among renters, 77 per cent said they rent because they are unable to purchase property and 68 per cent don’t think they will be able to buy in the next few years.

A majority, 66 per cent, of young people living with their parents also said they are doing so because they can’t buy property or pay rent.

EMPLOYMENT

Sixty-seven per cent of respondents said work is very or somewhat important in their lives compared to 31 per cent who said it is either not important at all or just a way to pay the bills.

However, young people are currently more likely to stay in their current jobs, at least in the short term, with 13 per cent saying they want to change jobs in the next year, down from 25 per cent in the 2021 study.

Among young people who do intend on leaving their jobs in the next year, 59 per cent said they could be convinced to stay if their employer increased their salary. More benefits and freedom with their work schedule and location came in second at 24 per cent.

Half of young workers also said they do what is expected of them or less at work.

“While important, employment is not necessarily central to Generation Z and millennials’ lives,” the report says.

“Favoured by the labour shortage, they have the luxury of choosing a job that offers them work-life balance and exciting career challenges. If 2021 was the year of job mobility, 2022 may well be the year of stability, with a decreasing number of young workers saying they want to leave their company in the next year.”

The results of the Leger survey differ from those of another recently-published study conducted by a business consulting firm. According to Robert Half, which polled a smaller group of Canadians a short time after the Leger survey was conducted, about half of Gen Zs and millennials plan on looking for a new job in the new year.

The results of that study suggested that economic uncertainty and the rising cost of inflation were driving younger workers to look for better-paying gigs.

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Bond correction coming: What an economist and an investor say about inflation – Financial Post

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Bond correction coming: What an economist and an investor say about inflation  Financial Post

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Freeland meets with provincial, territorial finance ministers in Toronto

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TORONTO — Deputy Prime Minister and Finance Minister Chrystia Freeland is hosting an in-person meeting Friday with the provincial and territorial finance ministers in Toronto to discuss issues including the current economic environment and the transition to a clean economy.

The meeting will focus on the economic situation both domestically and globally, according to a federal source with knowledge of the gathering, including discussions on how to provide incentives and supports to be competitive with the U.S.’s Inflation Reduction Act.

U.S. President Joe Biden’s Inflation Reduction Act includes electric-vehicle incentives that favour manufacturers in Canada and Mexico, as well as the U.S.

The incentives, which were already revised to include Canada and Mexico after originally focusing on the U.S., are now facing criticism from Europe about North American protectionism.

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The source, who spoke on the condition they not be named to discuss matters not yet made public said the ongoing challenges with health care in Canada will also come up at the meeting. More substantive discussions on that will be held next week when the prime minister meets with premiers on Feb. 7.

In her opening remarks, Freeland said it’s essential for Canada to have its rightful place in the transition to a clean economy, calling it one of the biggest challenges of the moment.

We are in a situation with a lot of economic uncertainty globally, said Freeland, adding that later in the day, the ministers will have a discussion with Bank of Canada governor Tiff Macklem.

“I think that conversation with the governor will be useful and important for all of us,” she said.

Despite the need to address health care challenges, Canadian jobs and the transition to a clean economy, Freeland said the government recognizes it also has to contend with real fiscal constraints.

Freeland will hold a closing news conference at 3:30 p.m. local time.

The meeting comes at a tense time for many Canadian consumers, with inflation still running hot and interest rates much higher than they were a year ago.

The Bank of Canada raised its key interest rate again last week, bringing it to 4.5 per cent, but signalled it’s taking a pause to let the impact of its aggressive hiking cycle sink in.

The economy is showing signs of slowing, but inflation was still high at 6.3 per cent in December, with food prices in particular remaining elevated year over year.

Interest rates have put a damper on the housing market, sending prices and sales downward for months on end even as the cost of renting went up in 2022.

Meanwhile, the labour market has remained strong, with the unemployment rate nearing record lows in December at five per cent.

— With files from Nojoud Al Mallees in Ottawa and James McCarten in Washington

This report by The Canadian Press was first published Feb. 3, 2023.

 

The Canadian Press

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Pakistan PM warns of IMF bailout conditions

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Pakistan’s Prime Minister Shehbaz Sharif has said that the government will have to agree to International Monetary Fund (IMF) bailout conditions that are “beyond imagination”.

Sharif’s comments on Friday came after an IMF delegation landed in Pakistan this week for last-ditch talks to revive vital financial aid which has stalled for months.

The government has held out against tax rises and subsidy-slashing demanded by the IMF, fearful of a backlash before elections due in October.

“I will not go into the details but will only say that our economic challenge is unimaginable. The conditions we will have to agree to with the IMF are beyond imagination. But we will have to agree with the conditions,” Sharif said in televised comments.

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The global lender has set strict conditions before resuming the bailout programme for Pakistan, such as asking the government to allow a market-determined exchange rate for the local currency, ease fuel subsidies, and control circular debt in the power sector.

Pakistan’s economy has been in dire straits, stricken by a balance of payments crisis as it attempted to service high levels of external debt, amid political chaos and a deteriorating security situation. On Wednesday, year-on-year inflation had risen to a 48-year high leaving Pakistanis struggling to afford basic food items.

Before the IMF visit, Islamabad began to bow to pressure with the prospect of national bankruptcy looming and no friendly countries willing to offer less painful bailouts.

The government loosened controls on the rupee to rein in a rampant black market in US dollars, a step that caused the currency to plunge to a record low. Artificially cheap petrol prices have also been raised.

Letters of credit are no longer being issued, except for essential food and medicines, causing a backlog of thousands of shipping containers at a Karachi port stuffed with stock the country can no longer afford.

Sajid Amin, a senior official at the Sustainable Development Policy Institute, a research institute in Islamabad, said Sharif’s statement revealed the depth of the challenges facing the economy.

“Without any doubt, the economic situation is tough. Pakistan is facing multiple crises, including balance of payment crisis, political instability – issues which have delayed decision making from government,” he told Al Jazeera. Amin further said that the delays in the last few IMF reviews have led to increased uncertainty and panic in the market.

“Two of the major IMF conditions, market-determined exchange rate and petrol price increase, are majorly met already. The talks are now more focused on how to meet Pakistan’s circular debt target in the power sector. The fund has not accepted the government’s plan and has asked for a revised plan to deal with the circular debt problem,” he added.

Uzair Younus, director of the Pakistan Initiative at the Atlantic Council’s South Asia Center said that the major hurdle in the IMF negotiations seemed to be the scale and pace of actions required to reduce the fiscal deficit and circular debt. He noted that the IMF’s terms did not seem unreasonable, especially considering the number of times Pakistan has reneged on promises.

“A key issue that remains is the increase in electricity prices and a credible plan to reduce the circular debt. Pakistan has paused these increases for several months, citing floods and other challenges. The IMF wants a rapid increase in rates to reduce the circular deficit, but the government wants to stagger these increases,” the Washington, DC-based analyst told Al Jazeera.

It was no surprise that the IMF was not eager to agree to a staggered approach, given that Pakistan did not have much credibility left when it comes to following through on its agreements, Younus added.

Amin said that given the precarious economic situation in the country, the government must do whatever it takes to get the IMF on board.

“The government must understand, and I think it does understand to some extent, that inflationary pressure and other costs are much higher than the costs of IMF conditions. I think this statement, therefore, may be preparing ground and making people ready for tough measures that the government is going to take to meet the IMF conditions.”

The tumbling economy mirrored the country’s political chaos, with former Prime Minister Imran Khan heaping pressure on the governing coalition in his bid for early elections while his popularity remains high.

Khan, who was removed last year in a no-confidence motion, negotiated a multibillion-dollar loan package from the IMF in 2019.

But he reneged on promises to cut subsidies and market interventions that had cushioned the cost-of-living crisis, causing the programme to stall.

It has been a common pattern in Pakistan, where most people live in rural poverty, with more than two dozen IMF deals brokered and then broken over the decades.

 

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