‘Substantial uncertainty’ makes the pace of Canada’s economic recovery difficult to predict: government – Country

“Significant uncertainty” about Omicron Variations and troubles in the supply chain are making it difficult to predict how quickly the Canadian economy will recover from COVID-19 Depression.


Welcome to financial forecasting in the age of COVID-19.

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Bank of Canada to maintain current inflation mandate: Freeland

Tuesday’s fiscal update forecast two competing scenarios that could have a significant impact on that economic recovery. The “decline scenario” predicts “difficulty in adapting to COVID-19” if more variants, like Omicron, appear to delay a return to normal economic life.

“Waves of virus outbreaks prevent a full recovery in hard-hit businesses in areas that require close contact, large gatherings or international travel.… The pandemic is ongoing. It also exacerbates supply disruptions and labor shortages affecting a range of industries, with severe challenges lasting until 2023,” the document reads.

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Under that scenario, the recent severe flooding in BC exacerbating supply chain problems “weighs the recovery in Q4 2021”. Supply and labor shortages could also “create significant cost pressures that will drive inflation somewhat higher” by the end of 2022.

In other words: the difficulties currently facing the Canadian economy continue to last longer than expected.

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Trudeau says Omicron COVID variant is ‘scary’, but summer will be ‘better’

The Better Outlook predicts those supply issues resolve themselves more quickly, COVID-19 risks adjust, and Canadians return to spending on services, rather than just goods.

Even that scenario, however, has risks: stronger inflation in the near term, as “strong demand” outweighs limited supply.

The document notes: “The path forward will depend on some rearward and opposite airflow, which can aid recovery or push it off course,” the document notes.

“Based on the two scenarios they offer for growth, the effects are reasonable. But I guess people could argue that the worst-case scenario could be much worse than what they’re showing there,” said Mostafa Askari, chief economist at the University’s Institute of Fiscal and Democratic Studies. Ottawa school, said in an interview.

“There is a lot of uncertainty right now, basically because of the new variant. And I think people aren’t exactly sure how this is going to play out.”

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Fear of Omicron forces Canadian businesses to prepare for the worst

While the Liberal government is still running a historic deficit, the country’s fiscal outlook has improved slightly since Finance Minister Chrystia Freeland announced her first budget in April – mostly due to higher-than-expected income tax returns.

But Tuesday’s fiscal update makes it clear that the Liberal government will use the rebates to make “investments that drive long-term growth” in next year’s budget.

In that respect, Conservative Party Leader Erin O’Toole made several proposals Tuesday afternoon.

“Give the finance and capital to small businesses so they can grow, build world-class infrastructure across this amazing country, not fund important programs.” more bureaucratic,” O’Toole told the House of Commons in response to Freeland’s update.

“Let us also be proud of our resources sector and the millions of direct and indirect jobs from this sector. It’s the only thing that really drives our current account balance. “

© 2021 Global News, a division of Corus Entertainment Inc. ‘Substantial uncertainty’ makes the pace of Canada’s economic recovery difficult to predict: government – Country

Bobby Allyn

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