Here’s where the Canadian economy stands 3 years into the COVID-19 pandemic
As Canada approaches the three-year mark for the reason that begin of the pandemic, Statistics Canada has reviewed how COVID-19 has modified the Canadian economic system and society, displaying a combined bag of developments.
The StatCan report launched on Thursday discovered that whereas employment development and financial exercise continues to be sturdy, necessities resembling groceries and housing have gotten extra unaffordable. Meanwhile, a few of the damaging social impacts of COVID-19, together with elevated drug and alcohol use and poorer psychological well being, proceed to persist.
“Life in Canada, as in other countries, has changed in many ways since the start of the pandemic—some changes were direct impacts of the pandemic, while others were trends that were accelerated by it,” StatCan mentioned.
StatCan described Canada’s financial exercise as “resilient,” as actual GDP has outpaced different G7 international locations for the reason that second quarter of 2021. The report notes that Canada’s actual GDP was 2.7 per cent above pre-pandemic ranges in December 2022.
The Bank of Canada has steadily elevated rates of interest since February 2022 in an try to decelerate the economic system, and by extension, inflation. Interest charges at the moment stand at 4.5 per cent, however the Bank of Canada says it sometimes takes 18 months to 2 years to see the total results of charges hikes.
But regardless of sturdy financial development, new business openings seem to have plateaued. After the preliminary phases of the pandemic noticed a wave of business closures, the variety of energetic business recovered to pre-pandemic ranges by late 2021. However, as rate of interest hikes have pushed up borrowing cots, business entries have slowed and business closures have remained steady.
In November 2022, business openings fell to their lowest stage in two years, whereas insolvencies rose up because of challenges relating to provide chains, inflation and the labour market.
AFFORDABILITY PRESSURES REMAIN ‘WIDESPREAD,’ REPORT SAYS
The Canadian economic system additionally faces critical challenges with deteriorating housing affordability. While residence costs have come down since peaking in early 2022 because of the Bank of Canada’s rate of interest hikes, the typical price of a house was nonetheless 33 per cent above pre-pandemic ranges as of December 2022.
In some cities, the determine is far greater. Average residence costs within the Montreal space and the Greater Toronto Area had been 37 per cent above pre-pandemic ranges, whereas in Halifax, residence costs had been 58 per cent greater.
The fee hikes might have introduced down residence costs, however on the time, the report notes that mortgage curiosity prices had gone up by 18 per cent inside a 12 months as of December 2022.
On high of the excessive price of housing, inflation was above six per cent for 10 consecutive months in 2022. And whereas the headline inflation fee has come down in latest months, meals inflation stays excessive, with some grocery objects seeing yearly value will increase within the double-digit vary.
The excessive price of meals and housing has led to critical monetary stress for a lot of Canadians. Low revenue earners had main reductions of their private financial savings and higher-than-average will increase of their family debt, and in April 2022, StatCan discovered that one quarter of Canadians needed to borrow cash or use credit score to satisfy day-to-day bills. In late 2022, practically half of Canadians mentioned they had been involved with their family’s skill to afford housing, a StatCan survey discovered.
STRONG LABOUR MARKET GROWTH, BUT WORKFORCE CONTINUES TO AGE
Meanwhile, Canada has additionally seen sturdy development within the labour market, as unemployment charges stay at or close to file lows. In January 2023, employment ranges had been 800,000 jobs above pre-COVID-19 ranges, with positive factors largely pushed by jobs in skilled, scientific and technical providers, in addition to public administration and well being care.
But within the coming years, one in 5 working-age Canadians are set to retire, StatCan says, including that the hole between retirees and new entrants to the labour market is at “record levels.”
In order the fight these labour market developments, Canada has plans to spice up immigration ranges to as much as 500,000 newcomers per 12 months by 2025. However, StatCan says immigration will “only partially alleviate the impacts of population aging,” noting that newcomers’ expertise are usually underused in Canada’s labour market, and that new immigrants sometimes settle in bigger cities, which have the worst housing affordability.
SOCIAL IMPACTS OF COVID-19 STILL LINGERING
StatCan additionally says the social impacts of COVID-19 on well-being and psychological well being persist, particularly for youthful Canadians.
In late 2021, a StatCan survey discovered that six in 10 working-age Canadians and two-thirds of seniors felt they’d a “strong sense of meaning and purpose.” However, solely half of respondents aged 15 to 24 reported the identical factor. Older Canadians had been additionally extra more likely to report greater ranges of perceived well-being in comparison with these underneath 30.
And whereas COVID-19 was the largest explanation for extra deaths since March 2020, deaths because of alcohol and medicines additionally skyrocketed throughout this time interval.
In 2020, there have been 4,605 deaths because of unintentional poisoning, and in 2021, there have been 6,310. By comparability, the peak of the overdose disaster in 2017 noticed 4,830 poisoning deaths. Young individuals had been additionally disproportionately affected by these deaths.
