Manufacturing sector helps Canadian economy emerge from recession, although domestic and global challenges remain, new report finds

  • The latest report “The Real Economy Canada” also shows that from Canada the housing market accounted for two-thirds of economic growth in the first quarter, and demand is expected to hold.

  • Areas of activity such as Toronto and Vancouver show how a digital economy can mitigate the effects of trade wars and the pandemic.

  • However, President Biden’s new US industrial policy points to deepening trade frictions between the two countries, while stagnant business investment poses challenges for long-term economic development.

TORONTO, July 19, 2021 / CNW / – RSM Canada (“RSM”), the leading global provider of audit, tax and advisory services focused on mid-market companies, today launched its summer 2021 issue of “The real economy: Canadaa quarterly report that provides Canadian businesses with economic analysis and insight into the growth drivers, or economic headwinds, in Canada’s mid-market.

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With the lifting of lockdown restrictions coast-to-coast, the third edition of “The Real Economy: Canada“report examines the good performance of from Canada the manufacturing and housing sectors mean for from Canada long-term growth, and how that growth can be stifled due to persistent trade tensions with United States and the delay in business investment. The report also sheds light on resilience in the energy sector and how Toronto and Vancouver have succeeded in protecting their savings from the recession.

Key findings from this quarter’s report include:

  1. from Canada manufacturing sector surpasses pre-pandemic levels

  • First quarter manufacturing sales and railcar loadings exceeded pre-pandemic outflows.

  • Rising consumer expectations coincided with the rebound in new manufacturing orders, showing the importance of the production sector in downstream economic activity.

  • Ontario should benefit exponentially from the automotive brand’s commitments to investment in electric vehicles following the changing expectations of consumers and businesses.

from Canada the real estate market remains bullish

  • The housing sector remains at the forefront North America economic recovery despite headwinds facing the habitat ecosystem.

  • Demand is expected to continue as millennials become the backbone of consumer and workplace demand.

  • Continued spikes in household savings indicate that we may see an increase in investment in the housing market once consumers deem the pandemic less of an economic threat.

  • Reducing tariffs – particularly on Canadian lumber – will also be necessary to support the performance of the sector.

Toronto and Vancouver demonstrate resilience despite adverse economic conditions

  • The build-up of new economy companies in technology, media and entertainment has allowed both trade poles to thrive.

  • Both sources of talent benefit greatly from access to leading academic institutions, proximity to US and Asian markets, and accommodating government policies.

  • that of Vancouver the tech sector has grown at 29% per year – the fastest in North America – while Toronto grew its reputation as a digital incubator.

The return of US industrial policy could exacerbate Canada-US trade tensions

  • Canadian-made products face market challenges as a result of Biden’s “Buy American” provisions.

  • Almost two-thirds of from Canada GDP depends on trade; the United States accounted for 73% of Canadian exports in 2020.

  • Canada could feel the indirect effects of the latest US industrial legislation if it fails to keep pace with its neighbor to the south.
    from Canada tries to diversify its commercial market with countries like China, which accounts for just 5 percent of national exports, has had mixed results to date.

Business investment continues to hit a wall

  • Total business investment remains more than 14% below pre-COVID levels, signaling problems for from Canada long-term economic development.

  • The increase in household disposable income continues to outpace consumption, indicating a new imbalance in the consumption sector.

  • Refocusing the economy on strengthening the workforce and its ability to produce diverse valuables will be key to attracting long-term capital.

Despite the turmoil, the importance of the energy sector to the economy has increased in recent years

  • In 2020, energy products represented 18.4% of from Canada total exports to United States, against 8.7% in 1998.

  • In the first quarter of 2021, this ratio became even more extreme, with energy products accounting for 21.9% of from Canada total exports to United States.

  • The timeline for the transition to an all-electric economy remains undefined, suggesting a floor below oil prices in the medium term.

from Canada The manufacturing sector has almost single-handedly pulled the country out of recession in recent months, and this strong performance, coupled with promising signs in other areas such as real estate and energy, suggests that better days are ahead. come for the economy ”, said Alex Kotsopoulos, partner, projects and economy with RSM Canada. “But there is still a lot of work to be done on the trade front. from Canada overdependence on the United States makes it vulnerable to the trade frictions that occur between the two countries, and we are seeing this effect now as the Biden administration continues to focus first and foremost on rebuilding the economy American. “

Joe brusuelas, Chief Economist at RSM US LLP., added: “Although there are promising signs, business investment is still too low, and this is something that is slowing the potential for economic growth. Ultimately, the government must invest in the middle market and invest in productivity through measures such as the universal expansion of broadband coverage, child care, housing and nutrition security. These commitments, coupled with the ability of younger generations to work remotely, will enable sustained growth.

For more information on RSM Canada’s “The Real Economy”: Canada‘, or to download the report, please visit their webpage.

About RSM Canada

RSM’s goal is to provide the power to be understood to our clients, colleagues and communities through world-class auditing, tax and advisory services focused on mid-market companies. The customers we serve are the engine of global trade and economic growth, and we are focused on developing leading professionals and services to meet their ever-changing needs in the ever-changing business environment of today.

RSM Canada LLP provides public accounting services and is the Canadian member firm of RSM International, a global network of independent auditing, tax and consulting firms with more than 48,000 people in 120 countries. RSM Alberta LLP is a limited liability company and independent legal entity providing public accounting services. RSM Canada Consulting LP provides consulting services and is a subsidiary of RSM US LLP, a member firm of RSM International. For more information, visit rsmcanada.com, like us on Facebook, follow us on Twitter and / or contact us on LinkedIn.

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