Canada should experience post-covid growth in the second half of 2021, says the OECD.Click image to enlargeThe Canadian economy will rebound strongly and grow by 6.1 per cent in 2021 and 3.8 per cent in 2022, according to the latest report from the Organisation for Economic Co-operation and Development (OECD).

The OECD says growth will be spurred by reduced COVID-19 restrictions in the second half of this year and buoyant external demand.

While every labour market in the country is forecast to experience a recovery, OECD expects output levels will remain below trend and underlying inflationary pressures will be contained. Because of this, the group says government support for businesses and households experiencing revenue and income losses should remain available until economic recovery is well underway.

Economists at the OECD says monetary policy should remain accommodative, accompanied by a close watch on housing and corporate debt, with further reduction of quantitative easing when conditions warrant them. 

Economic activity more resilient than expected

Output growth has held up during the pandemic, with real GDP increasing by 0.4 per cent and 0.9 per cent (month-on-month) in February and March. Vaccinations, fiscal stimulus, higher prices for oil and other commodities and expectations of a significant U.S. fiscal package in March are boosting the recovery, says OECD, which is consistent with the positive business sentiment suggested in the Bank of Canada’s Business Outlook Survey.

Substantial Monetary and fiscal policy support

The Trudeau government’s policy stance remains accommodative and the budget for 2021 commits to maintaining support for households and businesses, including the Canada Emergency Wage Subsidy and the Canada Recovery Benefit. New supports include an additional wage-bill subsidy, the Canada Recovery Hiring Program. The Budget estimates the federal fiscal deficit at 6.4 per cent of GDP for the fiscal year 2021-22.

Economic growth will accelerate

While growth in the second quarter of 2021 will be tame, OECD predicts a pick-up as vaccination progresses and lockdown measures are lifted. This will boost consumer spending and labour market conditions. Exports will benefit from additional demand arising from the US fiscal package. An interest rate increase will likely come in the final quarter of 2022.

Risks

Despite the improving economic outlook, The OECD report warns that risks remain elevated. The emergence of highly contagious virus variants requiring renewed restrictions threatens the pace of economic recovery.

While the US fiscal package will undoubtedly boost demand for Canadian exports, the scale of the effect is unclear.

Even with these risks, Budget 2021 should improve the environment for business, including efforts to further lower domestic trade barriers.

New Industry 4.0 lab for Quebec manufacturers

Quebec manufacturers will soon have access to a real Industry 4.0 style factory of the future following an accouncement by the Centre de recherche industrielle du Québec (CRIQ) and Festo Canada of the opening of Canada's first-ever cyber-physical laboratory in the Montreal borough of Saint-Laurent.

Weakest manufacturing growth in almost two years

Canadian manufacturing growth moderated in December, according to the latest seasonally adjusted IHS Markit Canada Manufacturing Purchasing Managers’ Index.

Bystronic Canada appoints new direct sales engineer

Bystronic Canada has appointed David Golls as direct sales engineer for Alberta and British Columbia.

CME survey reveals COVID's scars on industry

Canadian Manufacturers and Exporters’ (CME) newly released Management Issues Survey shows the impact of the global pandemic on manufacturers, including disruptions in supply chain and increased labour and skills shortages.

Report: Ottawa should do more to safeguard Canada’s technology sector

Two prominent Canadian policymakers – one Conservative and one Liberal – have joined up to call on Ottawa to do more to protect the country’s technology sector.

Manufacturing leads August jobs rebound

Employment rose by 246,000 in August, compared with 419,000 in July, according to the latest jobs data from Statistics Canada.

Manufacturing PMI signals growth for start of 2018

The latest IHS Markit Canada Purchasing Managers’ Index (PMI), released at the beginning of this month, indicates that 2018 is off to a strong start for Canadian manufacturing.

Auto designer Chris Bangle's wild new EV design

Chris Bangle is well known among the auto industry for his innovative automotive designs. See his latest "wild-looking" vehicle.

Federal Election 2019: Where the parties stand

With the 2019 federal election only days away, where do the parties stand on issues that matter to industry – and to your business?

Abicor Binzel makes changes to Canadian operations

Etienne Blouin

Etienne Blouin has been promoted to head a new Environmental Systems Group at Abicor Binzel.

Manufacturers focus on augmented reality

Some manufacturers think augumented reality (AR) has an important role to play in the future and they, in conjunction with AR partners, have released the world's first augmented reality hardware and software functional requirement guidelines to help manufacturers incorporate AR technology into their processes.

The Ontario College of Trades has been replaced

The Ontario government is replacing the Ontario College of Trades (OCOT) with a new crown agency the provincial government hopes will make Ontario’s skilled trades and apprenticeship system more efficient, accessible and easier to navigate.

Ontario eyes manufacturing to lead the comeback

As the world licks its wounds and begins planning a return to work, the province of Ontario is looking at manufacturing to be its ace in the hole.

US firm to acquire Canadian aerospace parts maker General Donlee Canada

Triumph Group Inc., Berwyn, PA, plans to acquire General Donlee Canada Inc., Toronto, a Canadian manufacturer of flight critical complex machined components for $110 million in cash to acquire outstanding equity and retire the Canadian company's existing debt.

Trumpf appoints new product manager

TRUMPF Inc. has named Salay Quaranta as 2-D TruLaser Product Manager. Within this role, Salay will report directly to Mark Bronski, Director of TruLaser Products in North America.

Stay In Touch

twitter facebook linkedIn