The COVID-19 pandemic is not over yet. The presence of variants like Omicron is still scaring people all over the globe. Even the economies of different countries are also suffering. Thankfully, there is some good news for Canadians as Canada's economy eked out slight growth to start 2022, despite Omicron. Keep reading to know more.
The Reason
One of the key
reasons the Canadian economy did okay despite the pandemic is that the
goods-producing sectors did good and attained growth. The services sectors were
and are not in great shape.
Expanded GDP
According to
Statistics Canada, Canada's gross domestic product increased by 0.2% in January
this year. It's the eighth straight increase in a row. In December, there was a
small increase of 0.1%. The outputs in the good-producing sector rose by 0.8%
in January, and the leader was the construction sector.
Businesses in the
accommodation, food, entertainment, arts, and recreation sectors saw a decline
of 10% (or more) in their economic activities in January 2022 as people stayed
home due to the Omicron threat. Thankfully, these services rebounded in
February and beyond. The economy grew by 0.8% in February, led by industries
like mining, manufacturing, accommodation, oil & gas extraction, food
services, and construction.
Economist Royce
Mendes from Desjardins stated, "Despite the Omicron wave, the Canadian
economy was able to keep its foot on the gas in January. And, by February, it
was again time to hit the accelerator."
The Outlook
The Conference
Board of Canada has released its two-year economic outlook. It forecasts real
gross domestic product (GDP) growth of 4% in 2022 and 3.3% in 2023. The outlook for overall
growth is essentially unchanged from the Winter Economic Outlook, which was released
in January.
Ted Mallett,
Director, Economic Forecasting, The
Conference Board of Canada, stated, "Although restrictions are being
gradually removed at varying rates across Canada, Omicron's BA.2 sub-variant is
on the rise, indicating the pandemic is likely not finished yet. Adding to this
uncertainty, the Russian invasion of Ukraine brings plenty of future risks and
unknowns to our outlook."
The Conference
Board of Canada thinks that the surge in commodity prices created by Russia's
actions will affect our economy. The sudden rise in oil and gas prices will
boost the bottom lines of Canadian producers and government tax and royalty
revenues.
Similarly, grain
and oilseed prices have also risen because of concerns that Russian and
Ukrainian production will be down considerably this year.
The forecast by
The Conference Board of Canada is based on the assumption that sanctions on
Russia will be there for the medium term and will keep the resource prices up.
It is also
likely that the Russia-Ukraine war will negatively affect global supply chains.
Also, the rise in oil prices will ensure that transportation costs keep going
high. It will eventually put upward price pressure on internationally traded
goods. The Conference Board of Canada also expects that the war in Ukraine will
remain within those borders.
Sources:
https://www.cbc.ca/news/business/canada-gdp-january-1.6403518
https://ca.style.yahoo.com/canadas-economy-eked-slight-growth-130832962.html
https://canadanewsmedia.ca/canadas-economy-eked-out-slight-growth-to-start-2022-despite-omicron-cbc-news/