Manufacturer group warns of gathering economic storm
A slowdown is coming as Canada is woefully unprepared to weather its first recession in over a decade.
The Coalition of Concerned Manufacturers and Businesses Canada (CCMBC) has launched a campaign to raise the alarm about an approaching recession.
Canada will soon be facing recession driven by trade tensions from Brexit to the US, the China standoff, an inversion of the bond yield curve, higher corporate and personal debt and fewer monetary tools available to central bankers. This adds up to a significant economic slowdown at a time when Canada is woefully unprepared to weather its first recession in over a decade.
Noting the revenue-generating private sector shed 69,000 full-time jobs, while the public sector added 17,000 jobs, CCMBC president Jocelyn Bamford said: “Risks of a decline in manufacturing output and obstacles to energy output are on the rise, making Canada vulnerable to the rising tide of protectionism as well as a victim of bad domestic economic policy.”
Canadian governments facing a downturn typically stimulate the economy by borrowing to invest in infrastructure, reduce taxes and increase funding to transitional employment programs such as Employment Insurance. Reducing interest rates can also help Canadians cope with difficult economic circumstances.
But CCMBC special advisor Catherine Swift, former chair of the Canadian Federation of Independent Business and an economist, says the current Liberal government “has already committed to multi-year deficit spending, despite relatively good times in recent years, and monetary policy tools such as interest rates remain at historic lows so there is little room for further reductions. This leaves Canada especially vulnerable to an economic downturn.”
Moreover, ineffective policies designed to curb emissions in Canada are having unintended consequences not considered by policy makers in the rush to implement the 2015 Paris Climate Accord.
Coalition special advisor Dan McTeague, a businessman, former public servant and former MP, comments, “The inability to expand Canada’s energy infrastructure through deliberate pipeline hold ups by some indigenous groups and eco-activists, as well as foolish government policy, has seen billions in capital leave Canada along with jobs and economic opportunity. A depressed energy sector weakens the Canadian dollar. A weak currency means less purchasing power for consumers and business alike. Little wonder so many Canadians feel they aren’t making ends meet.”
Risks to the Canadian economy are on the rise, with a softening business investment climate and declining consumer confidence. Outside shocks to the trade-dependent Canadian economy will expose us to the effects of Ottawa’s poor economic judgement in frittering away the opportunity to build a fiscal cushion in good times, leaving Canadians particularly vulnerable in the bad times ahead.
Economic storm clouds are gathering, yet Prime Minister Trudeau continues to spend our money at an unprecedented rate in a pre-election vote-buying frenzy. This spending adds to the $70 billion in debt already accumulated since Liberals took office in 2015, at a time of economic growth, with no thought to the future for average Canadians.
Unlike their federal government, Canadians need to prepare for tougher times.