Global Pressure, Manitoba Impact – Winnipeg Free Press

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

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

He described the economic slowdown across the country. Rising interest rates, inflation, geopolitical tensions, the upcoming US election and lower consumer spending have contributed to business uncertainty and reduced investment, Desjardins noted.

“Do we think inflation will be overcome?” Yes, he said. “But it will take some time.”

Economists expect the Bank of Canada's core inflation rate to decline later this year. However, according to media reports on Wednesday, the central bank did not have a clear timetable for such a move.

Manitobans are affected by high interest rates that make mortgages and other debt more expensive, Desjardins noted.

Manitoba has the fourth highest level of household debt in Canada, he said.

Kevin DeBlair, Commercial Credit Adjusters Ltd. president, meets with clients who can't afford the rising cost of living. On Wednesday, he also addressed the wards.

“(Clients) say, 'I'm not making enough money to pay these bills,'” DeBlair said. “Now we're focused on ways to save money and how they can overcome their debt.”

The penny-pinching mindset applies to businesses, including commercial credit regulators, he added. “Should we invest in new technologies, or should we save that money to pay more employees?”

In his presentation, Desjardins is showing business confidence in Canada.

Despite this, Manitoba has the lowest unemployment rate in the country. Last year, the province added 20,000 jobs, offsetting labor force growth.

Manitoba and Canada as a whole should see “above average” job creation to support immigration, Desjardins said. However, job growth in the country is expected to slow.

As a result, the unemployment rate in the province may increase. It is currently low at 4.2 percent, Desjardins noted.

“As we move forward, we think that the slack in our labor market may lead to some easing of the pressure on the wage front (for businesses),” he said.

Immigration is needed to fill labor gaps in an aging population, but it also puts pressure on an already tight housing market, Desjardins added.

Desjardins said Canada's exports could be “slightly weaker” this year as trading partners around the world grapple with similar economic challenges.

Businesses worry that global conflicts such as Ukraine and the Israel-Hamas war will further disrupt supply chains and drive up transport costs.

“(It's) nowhere near what we went through,” Desjardins assured the crowd.

Desjardins said he's optimistic about the future — even if Manitoba itself experiences a year of “subpar growth.”

“We have to get over this hump in our economy,” he said. “We should see interest rates come down.”

Once that happens, businesses across Canada are likely to spend more because many have money to invest but are looking for stability, Desjardins said.

The Bank of Canada aims to reduce the national inflation rate to two percent. In December, this figure was 3.4 percent.

Manitoba's inflation rate was low at 1.7 percent.

“I think everybody … is looking for lower interest rates,” said Chuck Davidson, president of the Manitoba Chambers of Commerce.

In the meantime, he hopes to see business policies affected by inflation. “Manitoba is doing well, but I think there's room for growth going forward,” he added.

Deloitte published its economic forecast last month; it expects Manitoba's GDP to grow 0.4 percent this year.

Desjardins Group came to this conclusion in its latest forecasts.

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Gabriel Piche
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Gabby is a big fan of people, writing and reading. She graduated from Red River College's Creative Communications program in spring 2020.

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