New GDP data, and a contest for the end of the term!
Written By: Peter Robertson, Judy Lee, and Sumeet Dhatt
Canada’s Economy at a Glance
Economics Society News, Events, and Articles
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Economist of the Week
News and Noteworthy
Canada’s economy eked out slight growth to start 2022, despite Omicron
Canada’s economy grew for the 8th straight month in January recording a 0.2% increase in GDP for the month. While service industries struggled due to increased COVID cases, good-producing industries more than made up for the losses. Preliminary data shows even stronger growth in February suggesting growth of 0.8% for the month. Read more.
Home prices under ‘full-scale attack’ as interest rates, taxes rise: economist
BMO senior economist Robert Kavcic believes home prices could fall by more than 10% due to interest rate hikes and new provincial taxes on non-resident buyers. Current data from money markets suggests the key interest rate is expected to rise to 2.75% by the end of this year from the current level of 0.5%. Kavcic believes the Bank of Canada is “well behind the curve” on interest rate hikes, expecting rapid increases over the coming months that would cool the housing market. Read more.
Ontario reaches $10-a-day child-care deal with federal government: sources
A $10.2 billion deal was struck with the federal government this week to fund Ontario’s first 5 years of the new $10-a-day daycare program. Ontario was the last province to sign on to the deal. Costs are expected to drop by 25% this year, ramping down to $10 per day by 2025. To encourage people to work in the industry to meet increased demand, the minimum wage for program staff will rise to $18/hour. Read more.
Canada releases plan for a 40 per cent cut in carbon emissions by 2030
In an effort to slash emissions by 40 to 45 per cent below 2005 levels by 2030, the federal government has unveiled a plan that will boost incentives for zero-emission vehicles (ZEVs) and sweeten tax breaks for greener companies in the fossil fuels sector. Beyond the forthcoming tax credit, the government is also urging the electricity, oil and gas, and transportation sectors to pursue new technologies to make the process cleaner and greener. Read more.
European Inflation Soars to Record 7.5% on Fuel, Food Costs
Inflation in Europe has soared to another record, in a fresh sign that rising energy prices fueled by Russia’s war in Ukraine are squeezing consumers and adding pressure on the central bank to raise interest rates. The latest reading smashed the high set, since recordkeeping for the euro began in 1997, when the inflation rate hit a revised 5.9% last month. This is the fifth straight month that inflation in the eurozone has set a record, bringing consumer prices in the 19 countries up by 7.5%. Read more.
China Crushed Covid. But Covid Zero Could Crush China
As Covid makes a resurgence in China, two of China’s most economically vibrant cities went into strict lockdowns. Foxconn – a key supplier to Apple – was among those forced to close factories, and Tesla Inc.’s plant had to suspend output. The shutdown contributed to a plunge in the stock market and sent a shudder through global supply chains. Global growth – already reeling from the war in Ukraine – will likely take another hit. Read more.