Growth To Continue, But Uncertainties Persist

The Conference Board of Canada’s two-year economic outlook forecasts real gross domestic product (GDP) growth of four per cent this year, easing to 3.3 per cent in 2023. “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,” says Ted Mallett, director, economic forecasting, at the Conference Board of Canada. “Adding to this uncertainty, the Russian invasion of Ukraine brings plenty of future risks and unknowns to our outlook.” The board says the commodity price surge created by Russia’s actions will have numerous effects on the Canadian economy. The sharp rise in oil and gas prices is boosting the bottom lines of Canadian producers and government tax and royalty revenues. The war will further strain global supply chains and high oil prices will keep transportation costs elevated, putting upward price pressure on internationally traded goods. Although these were issues before the war, the board expects them to persist. Omicron-related closures resulted in job losses at the start of this year, but employment rebounded in February. After a tumultuous start, the board expects the Canadian economy to add nearly 700,000 jobs in 2022, underpinned by gains in the commercial service industries. Impressive job growth in February allowed the labour market to reach a milestone of 19.5 million employed and the unemployment rate fell to 5.5 per cent – a near record low. However, not all is rosy on the labour front as record-low unemployment and a massive number of job vacancies are holding back production in many regions and industries in Canada.