Global pressures, Manitoba impact

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This article was published 08/02/2024 (636 days ago), so information in it may no longer be current.

Manitoba is facing a year of “subpar growth” amid ongoing global uncertainty, a leading economist told provincial business leaders Wednesday.

Dawn Desjardins, chief economist of Deloitte Canada, laid out Canada’s economic landscape at a Manitoba Chambers of Commerce event in downtown Winnipeg.

She described a slowing economy across the country. Rising interest rates, inflation, geopolitical tensions, an upcoming United States election and less consumer spending have contributed to business uncertainty and pullback in investment, Desjardins outlined.

“Do we think inflation is going to be beaten? Yeah,” she said. “But it is going to take some time.”

Economists predict the Bank of Canada’s key inflation rate will decrease later this year. However, media reports Wednesday show the central bank has no certain timeline for such a move.

Higher interest rates — which make mortgages and other debt more costly — have impacted Manitobans, Desjardins noted.

Manitoba has the fourth highest household debt to income level in Canada, she said.

Kevin DeBlaere, president of Commercial Credit Adjusters Ltd., meets with clients who can’t afford the rising cost of living. He, too, addressed the chambers crowd Wednesday.

“(Clients say), ‘I am just not making enough to pay these bills,’” DeBlaere said. “Now we’re focused on ways to save money where they can cut and how they can overcome their debt.”

The penny-pinching mindset applies to businesses, including Commercial Credit Adjusters, he added. “Do we invest into new technologies or do we have to save that money to meet the wage enhancement for employees?”

Businesses are showing a lack of confidence throughout Canada, Desjardins said in her presentation.

Even so, Manitoba touts the lowest unemployment rate in the country. Last year, the province added 20,000 jobs, offsetting the labour force growth.

Manitoba — and Canada overall — needs to see “higher than normal” job creation to support immigration, Desjardins said. However, job growth nationally is expected to slow.

The province’s unemployment rate will likely increase as a result. It’s currently low, sitting at 4.2 per cent, Desjardins noted.

“We think as we move forward, the weakening in our labour market probably is going to lead to a little bit less of the pressures on the wage front (for businesses),” she said.

Immigration is needed to fill labour gaps in an aging population, but it’s also pressuring an already constricted housing market, Desjardins added.

Meantime, Canada may face “a little bit of weakening” in its exports this year, as trading partners across the globe grapple with similar economic troubles, Desjardins said.

Businesses worry global conflict — such as in Ukraine and the Israel-Hamas war — will lead to further disruption in supply chains and higher transportation costs.

“(It’s) nothing near what we have experienced,” Desjardins assured the crowd.

Desjardins said she is optimistic about the future — even if Manitoba itself will experience a year of “subpar growth.”

“We have to get through this hump in our economy,” she said. “We need to see interest rates move down.”

Once that happens, businesses will likely spend more throughout Canada, as many have money to invest but are holding back, seeking stability, Desjardins stated.

The Bank of Canada has a goal of dropping the national inflation rate to two per cent. In December, the rate was 3.4 per cent.

Manitoba’s rate of inflation was lower, hovering at 1.7 per cent.

“I think everyone is… looking for interest rates to start going back down,” said Chuck Davidson, president of the Manitoba Chambers of Commerce.

In the meantime, he’s hoping to see policy address businesses impacted by inflation. “Manitoba is doing OK, but I think there’s some room to grow moving forward,” he added.

Deloitte released an economic forecast last month; it expects Manitoba’s GDP to grow 0.4 per cent this year.

Desjardins Group came to the same conclusion in its own recent projections.

gabrielle.piche@winnipegfreepress.com