How the Canadian economy stands 3 years into COVID-19
As Canada approaches the three-year mark since the start of the pandemic, Statistics Canada has reviewed how COVID-19 has changed the Canadian economy and society, revealing a number of trends.
It StatCan’s report was released Thursday found that while employment growth and economic activity remain strong, essential goods such as groceries and housing have become more unaffordable. Meanwhile, some of the negative social impacts of COVID-19, including increased drug and alcohol use and poorer mental health, persist.
“In Canada, as in other countries, life has changed in many ways since the beginning of the epidemic. some changes were direct effects of the pandemic, while others were trends accelerated by it,” StatCan said.
StatCan described Canada’s economic activity as “resilient” as real GDP outpaced the rest of the G7 countries from the second quarter of 2021. The report notes that Canada’s real GDP is 2.7 percent above pre-pandemic levels in December 2022.
The Bank of Canada has been raising interest rates steadily since February 2022 in an effort to slow the economy and, by extension, inflation. Interest rates currently stand at 4.5 per cent, but the Bank of Canada says it typically takes 18 months to two years to see the full impact of a rate hike.
But despite strong economic growth, new business openings appear to have picked up. After the initial stages of the pandemic saw a wave of business closures, the number of active businesses recovered to pandemic levels by the end of 2021. However, as rising interest rates have increased borrowing, business arrivals have slowed and business closures have remained. stable.
Business openings fell to their lowest level in two years in November 2022, while insolvencies rose amid challenges to supply chains, inflation and the labor market.
ACCESSIBILITY PRESSURES REMAIN ‘WIDESPREAD’, says report.
Canada’s economy also faces serious challenges related to deteriorating housing affordability. While home prices have fallen since peaking in early 2022 thanks to the Bank of Canada’s rate hikes, the median home value as of December 2022 was still 33 percent above pre-pandemic levels.
In some cities, that figure is much higher. Median home prices in the Montreal area and Greater Toronto Area were 37 percent higher than pre-pandemic levels, while Halifax home prices were 58 percent higher.
Rising interest rates could have pushed down home prices, but at the time, the report said mortgage interest costs had risen 18 percent in the year to December 2022.
In addition to high housing costs, inflation has been above six percent for 10 consecutive months in 2022. And while overall inflation has eased in recent months, food inflation remains high, with some grocery items seeing annual price increases. two-digit range.
The high cost of food and housing has put Canadians under serious financial stress. Low-income earners experienced large reductions in their personal savings and higher-than-average increases in household debt, and in April 2022, StatCan found that a quarter of Canadians had to borrow money or use credit to cover everyday expenses. By the end of 2022, almost half of Canadians said they were concerned about their households’ ability to afford housing, a StatCan survey found.
STRONG LABOR MARKET GROWTH, BUT WORKFORCE CONTINUES TO AGE
Meanwhile, Canada has also seen strong labor market growth as the unemployment rate remains at or near record lows. In January 2023, the employment rate was 800,000 jobs above the pre-COVID-19 level, with gains driven primarily by jobs in professional, scientific and technical services, as well as government and health care.
But one in five working-age Canadians is set to retire in the coming years, StatCan said, adding that the gap between retirees and new entrants is at a “record high.”
To combat these labor market trends, Canada plans to increase immigration to 500,000 new arrivals annually by 2025. However, StatCan says immigration will “only partially mitigate the impact of an aging population,” noting that newcomers’ skills tend to be underutilized in Canada’s labor market and that new immigrants tend to settle in larger cities with the worst housing affordability.
THE SOCIAL IMPACTS OF COVID-19 ARE STILL WIDESPREAD
StatCan also says the social impact of COVID-19 on well-being and mental health persists, particularly for young Canadians.
At the end of 2021, a StatCan survey found that six in 10 working-age Canadians and two-thirds of seniors feel they have a “strong sense of meaning and purpose.” However, only half of respondents aged 15 to 24 reported the same. Older Canadians were also more likely to report higher levels of perceived well-being compared to those under 30.
And while COVID-19 was the largest cause of excess deaths since March 2020, alcohol and drug-related deaths also rose sharply during this period.
In 2020, there were 4,605 accidental poisoning deaths, and in 2021, 6,310. By comparison, at the height of the overdose crisis in 2017, there were 4,830 poisoning deaths. Young people were also disproportionately affected by these deaths.
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