PETERBOROUGH (ON) CHAMBER OF COMMERCE | PETERBOROUGH, ON
  • About Us
    • About Us
    • Policy and Advocacy
    • Contact Us
    • Board of Directors
    • Staff Directory
  • Events
    • Calendar
    • Monthly >
      • The Business Exchange (TBX)
      • ChamberAM
      • Business Owners Sharing Solutions (BOSS)
      • Not-for-Profit Group (NFP)
      • 26 Coffees
    • Annual >
      • Power Hour
      • Business Summit
      • Seniors Showcase
      • Annual General Meeting
      • PK Excellence
    • Campaigns >
      • #lovelocalptbo campaign
  • Membership
    • Join Us
    • Benefits
    • Profile and Sponsorships
    • Resources
    • Members Only
  • News
    • Voice of Business
    • Subscribe to e-Newsletter
  • Resource Hub
  • Directory

Is the boom really a boom?

11/15/2017

 
Picture
Over the past few months we’ve been hearing from government how strong the economy is performing.  This strength and resulting prosperity is also being given as the reason for tax changes federally and for an aggressive schedule for provincial legislative changes to the Employment Standards Act.  Now while the federal picture may not be exactly like the provincial one there are similarities and trickle down impacts.  Can the growth of the past two quarters be expected to continue in the third quarter?  Hendrik Brakel of the Canadian Chamber of Commerce takes a look at the main economic drivers behind the unexpected growth and what we can expect when the Q3 numbers are released in a few weeks on December 1st.

5 Minutes for Business: Canada's Economy is Booming, But Will It Last?
Boom! Canada hit 4.5% growth in the second quarter after a torrid 3.7% expansion in Q1! Sounds like growth in India, not a sleepy advanced economy. As a result, Canada’s deficit is lower than expected and the government announced additional spending. So is it time to stop worrying and pop the champagne?

There are four key drivers of this bonanza: (1) export growth thanks to the oil and gas sector; (2) consumption, because Canadians continue to borrow and spend like there is no tomorrow; (3) housing which saw the biggest gains in 8 years; and (4) a healthy gain in business investment. The question is whether these are likely to continue?

Firstly, Canada’s exports are set to rise 8% this year, which is superb, but is almost entirely driven by oil and gas sales which are up almost 42% so far this year. If you take out the petroleum sector, Canada’s exports grew just 1%.
​
But the export boom won’t last: the strong loonie and US weakness caused Q3 exports to fall 11.5%, while imports fell 7.1%. Net exports will be a drag on GDP growth for the rest of 2017.

Consumption will also slow down in Q3. Retail sales fell two months in a row (July and August). And job growth slowed: just 43K jobs were created in Q3, the weakest quarter in a year, with gains entirely in the self-employment category. Private sector employment fell for the first time since 2015.

Housing has been a powerful driver of growth, but the foreign buyer tax hit Canada’s largest and fastest growing real estate market in May. Toronto’s home sales have fallen 35% while prices were off 20%. The effects are likely to be temporary, as we saw in Vancouver, but will surely be felt in Q3.

The star of investment spending has been the recovery in the oil and gas sector but that is also facing tough times. The National Energy Board’s expanded focus on downstream emissions has created an effective moratorium on new energy projects. TransCanada finally pulled the plug on Energy East and in the last two years, $82 billion of investment has been cancelled.

So, we can expect a sharp downturn in exports and housing alongside much weaker consumption and
business investment. Statistics Canada will release Q3 growth on December 1st and we expect it to be below 1%. What should we do? How do we keep growing?

Look around the world - these are exciting times in tax policy! France has just embarked on major tax reforms, with a 2017 budget that reduces or eliminates several business taxes, while lowering overall rates. The UK Government undertook a major tax reform effort last year, but backed away from the most contentious measures in April 2017. And in the US, Congressional Republicans are determined to press ahead with the biggest tax reform in 30 years, to slash the general corporate rate from 35% to 20% while eliminating certain tax credits.
​
What is Canada doing in the midst of our trading partners' laser-like focus on competitiveness? We've just spent most of the summer in a ferocious battle over income sprinkling. Instead, Canada could create an internationally competitive system of business taxation that rewards entrepreneurship, encourages businesses to invest in the technologies, skills, and capacity they need to grow, and attracts capital and highly qualified people from around the world. That would ensure Canadian growth for generations!

Comments are closed.

    Author

    The Peterborough 
    Chamber of Commerce acts as a catalyst to enhance business growth, opportunity, innovation, partnerships and a diverse business community. 

    Archives

    March 2023
    February 2023
    January 2023
    December 2022
    November 2022
    October 2022
    September 2022
    August 2022
    July 2022
    June 2022
    May 2022
    April 2022
    March 2022
    February 2022
    January 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    July 2021
    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    September 2015
    August 2015
    June 2015
    May 2015
    April 2015
    January 2015

    Categories

    All

    RSS Feed

Copyright © 2021 Greater Peterborough Chamber of Commerce.  ​All rights reserved.
175 George Street North, Peterborough, ON, K9J 3G6
Phone: (705) 748-9771  |  (705) 743-2331  
Home    |    Calendar    |   Site Map   |    Privacy    |    Accessibility
Join the Chamber
MemberClicks
  • About Us
    • About Us
    • Policy and Advocacy
    • Contact Us
    • Board of Directors
    • Staff Directory
  • Events
    • Calendar
    • Monthly >
      • The Business Exchange (TBX)
      • ChamberAM
      • Business Owners Sharing Solutions (BOSS)
      • Not-for-Profit Group (NFP)
      • 26 Coffees
    • Annual >
      • Power Hour
      • Business Summit
      • Seniors Showcase
      • Annual General Meeting
      • PK Excellence
    • Campaigns >
      • #lovelocalptbo campaign
  • Membership
    • Join Us
    • Benefits
    • Profile and Sponsorships
    • Resources
    • Members Only
  • News
    • Voice of Business
    • Subscribe to e-Newsletter
  • Resource Hub
  • Directory