Normalcy Out the Window
Updated: April 14, 2022 | Français
The Omicron wave of the COVID-19 pandemic had largely worked its way through the population this winter, and Canadians had been looking forward to life returning to normal. Russia’s invasion of Ukraine, however, threw that hope out the window. While the human tragedies inside Ukraine’s borders make the impacts on Canada and Canadians seem tiny in comparison, the invasion does add plenty of future risks and unknowns to our outlook.
Russia, it appears, had banked on a lightning strike leading to the quick submission of the Zelensky government in Ukraine. Now that Russia’s army has bogged down and international sanctions are starting to bite down hard on its economy, risks of escalation have only multiplied.
Canada is not a significant trading partner with Russia, so the interruption of direct imports or exports between the two countries will not have a large effect. The commodity price surge that followed the invasion, however, will have significant impacts—both positive and negative.
Contents of the Spring 2022 edition:
Russia’s invasion of Ukraine destabilizes a world that had been hoping for an improvement in the COVID-19 story. There is considerable risk on both fronts.
Sharply higher commodity prices and trade flow disruptions will benefit producers in Canada’s primary sector but add to inflation pressures and supply chain challenges for the rest.
Real GDP growth will stay on its pandemic-recovery track this year and next, but slower performances will follow as elevated consumer savings start to dry up.
The labour force has returned to pre-pandemic levels, with high participation rates and low unemployment. We expect labour vacancies to be a continuing problem for employers.
Canada’s two-year outlooks details:
Two-year outlook for provinces looks promising
|Economies rebounding yet risks remain on the path to recovery|
|Forecasts indicate the national economy is expected to grow 3.9 per cent this year and 3.3 per cent in 2023. Owing largely to the receding impact of Omicron, provincial economies are expected to follow this upward trajectory despite geopolitical tensions, supply chain issues, and high inflation. Our Provincial Outlook examines the latest trends impacting provincial economies in 2022 – 2023. New provincial summaries are available now.|
Alberta and Saskatchewan will lead the country in growth this year and next, largely because prices for energy products and other key commodities have recovered strongly.
Ontario’s economy had been held back by some of Canada’s toughest COVID-19 control measures. Now, consumers are poised to give a strong boost to the service sector in 2022.
COVID’s Omicron variant has blown through the economy faster than other strains, but a fractious public has made it a more difficult journey.
Growth will be modest in the Atlantic provinces, though a hoped-for recovery in tourism could help boost prospects. Newfoundland and Labrador will have oil production on stream, allowing it to take advantage of high world oil prices