Weekly Digest – 05 July 2024

Weekly Digest – 05 July 2024

Welcome to our Weekly Digest – stay in the know with some recent news updates relevant to business and the economy.

Why the Bank of Canada will delay its next interest rate cut until September


Dawn Desjardins, chief economist at Deloitte Canada, recently spoke with Financial Post’s Larysa Harapyn about the potential effects of the Bank of Canada’s interest-rate cuts. She discussed how these cuts may unfold and their anticipated impact on the Canadian economy.

Desjardins highlighted the immediate and long-term effects of the rate cuts on economic growth. She explained that while lower interest rates could boost spending and investment, the overall economic recovery might still face significant hurdles.

In terms of the housing market, Desjardins noted that interest-rate cuts could make borrowing cheaper, potentially increasing demand for homes. However, she cautioned that other factors, such as supply constraints and affordability issues, could limit this growth.

Looking ahead, Desjardins shared her predictions for the coming year. She expects the economy to gradually improve but emphasized the need for careful monitoring of various economic indicators to ensure a sustained recovery.

Canada’s GDP grew by 0.3% in April, with some sectors bouncing back.

Canada’s economy grew by 0.3 per cent in April, driven by gains in several key industries, according to Statistics Canada. This growth comes after no change in GDP in March, reflecting a positive shift in economic activity.

Key sectors contributing to this growth included wholesale trade, oil and gas extraction, and manufacturing. These industries showed significant strength, helping to bolster the overall economic performance for the month.

The data released by Statistics Canada matched analysts’ expectations. A Reuters poll had forecasted a 0.3 per cent GDP growth for April, aligning with the actual reported figures.

This growth in April indicates a rebound in certain sectors, suggesting that the economy is moving in a positive direction despite previous stagnation. The performance of these industries will be crucial in sustaining future economic growth.

Canada’s economy will recover slowly.

For three years, Canada’s economy has been burdened by debt, inflation, and high interest rates, struggling like a train climbing uphill. The combination of rising prices and the subsequent interest rate hikes intended to curb inflation has significantly slowed economic progress.

Inflation surged, prompting higher interest rates as a remedy. This approach, while necessary, has created challenges for economic growth, affecting various sectors and consumer spending. The impact has been felt across the country, with many businesses and individuals facing increased financial pressure.

However, there is now a glimmer of hope on the horizon. According to an economic outlook from Deloitte, the peak of these challenges may finally be in sight. This suggests that the economy could be nearing a turning point, with potential for gradual improvement ahead.

It is essential to remain cautious, as the path to recovery is not guaranteed to be smooth. Nevertheless, the signs indicate that Canada’s economy may be starting to recover, provided this anticipated peak is not a false summit.

The future of business immigration to Canada: what to expect

As of June 2024, several emerging trends and predictions are shaping the landscape of business immigration to Canada. These developments are significantly influenced by various factors impacting the global and national economy.

Technological advancements are playing a crucial role in transforming business immigration. New technologies are streamlining the application process, improving efficiency, and making it easier for skilled workers and entrepreneurs to move to Canada.

Policy changes are another key driver of these trends. The Canadian government is continuously adjusting its immigration policies to attract top talent and meet the evolving needs of the economy. These adjustments aim to ensure that Canada remains competitive in the global market.

Global economic shifts also impact business immigration. As the global economy changes, Canada adapts its immigration strategies to address new opportunities and challenges. This dynamic environment requires a proactive approach to attract and retain the best international talent for sustained economic growth.

Digital Service Tax: Does it harm productivity and innovation?

The Ontario Chamber of Commerce’s (OCC) President and CEO, Daniel Tisch, recently released a statement expressing significant concerns about the new Digital Service Tax (DST) provisions included in Bill C-59.

Tisch highlighted that the DST could have far-reaching negative impacts on businesses across Ontario. He emphasized that the tax might discourage innovation and hinder the growth of the digital economy in the province.

The OCC’s statement also pointed out that the DST could create an uneven playing field for businesses. By imposing additional costs, the tax could disproportionately affect smaller companies that are less equipped to absorb these expenses compared to larger, more established corporations.

Tisch called for a reconsideration of the DST provisions, urging lawmakers to carefully evaluate the potential economic repercussions. He stressed the importance of fostering a business environment that supports growth and innovation, rather than imposing measures that could stifle these objectives.


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