Weekly Digest – 1 September 2023

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

Why America’s election is Canada’s business

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Canadians exhibit an unwavering dedication to closely scrutinizing American elections, a level of interest that rivals their own domestic political affairs, and it is not without reason. The profound interconnectedness between our nation and our southern neighbor, a formidable superpower and the global economic powerhouse, necessitates such attentiveness. Each choice made within the walls of 1600 Pennsylvania Avenue or within the hallowed halls of Capitol Hill reverberates across the Canadian landscape, leaving an indelible imprint on our economy and security. The symbiotic relationship we share with the United States is not merely an abstract concept but a tangible reality.

Our economic ties intricately intertwine, with trade flowing ceaselessly across the border, creating jobs, fostering growth, and fueling prosperity on both sides. Consequently, any policy, regulation, or trade agreement formulated by American decision-makers holds the potential to directly impact the livelihoods of countless Canadians. Whether it be fluctuations in currency exchange rates, alterations in import/export tariffs, or shifts in market dynamics, the repercussions are palpable within our borders.

Additionally, the security of our nation is intimately linked with that of the United States. The threats and challenges we face, whether they be terrorism, cyberattacks, or global conflicts, are not confined by geographical boundaries. As allies, we stand shoulder to shoulder with our American counterparts, collaborating in intelligence sharing, defense cooperation, and joint military operations. Thus, any decision made in Washington D.C. has far-reaching consequences for our collective safety and stability.

Beyond the realm of economics and security, the cultural and social fabric of Canada is inevitably influenced by the happenings in the United States. Trends in politics, social movements, and popular culture often originate or gain significant momentum south of the border before permeating throughout our society. The values and ideologies espoused by American leaders have the power to shape public discourse, ignite debates, and inspire Canadians to reflect upon their beliefs and aspirations. In this era of globalization, where the world is becoming increasingly interconnected, the significance of understanding and engaging with American politics cannot be overstated. As responsible citizens of a nation whose destiny is intertwined with that of the United States, Canadians recognize the imperative of staying informed and actively participating in the democratic processes of our southern neighbor. Our collective fate is inextricably linked, and as such, we fervently observe and analyze the unfolding American elections, cognizant of the profound impact they have on our country.

Ottawa needs to be ‘careful’ with placing caps on international students, businesses say

Bronte Bay Subhash SharmaThe federal government, in its potential plan to implement a cap on the influx of international students entering Canada, will need to exercise caution and employ a nuanced approach. This is imperative to ensure that such measures do not inadvertently hamper the country’s capacity to allure and retain exceptional individuals with exceptional skills and abilities. Prominent business leaders and esteemed economists emphasize the significance of striking a delicate balance in order to maintain Canada’s appeal to top-tier talent from around the world. The global landscape has witnessed a surge in the mobility of students seeking quality education abroad, and Canada has emerged as a preferred destination.

The influx of international students has not only contributed to the cultural diversity of Canadian campuses but has also bolstered the country’s economy through their spending and potential contributions to the workforce. However, as the number of international students continues to rise, concerns have been raised regarding the potential strain on local resources, including housing, infrastructure, and job opportunities. In response, the federal government has considered implementing a cap on the number of international students admitted each year.

While the intention behind such a measure may be rooted in addressing these concerns, it is crucial to approach this issue with caution. A blanket cap on international student admissions could inadvertently deter exceptional individuals from choosing Canada as their educational destination. These individuals possess exceptional skills and abilities that can contribute significantly to Canada’s knowledge economy, innovation, and overall competitiveness on the global stage. Prominent business leaders and esteemed economists have echoed these sentiments, emphasizing that Canada must maintain its appeal to top-tier talent from around the world.

To achieve this delicate balance, the federal government should consider implementing targeted measures rather than a broad-based cap. These measures could include enhanced screening processes to ensure that admitted students possess the necessary skills and potential to contribute to Canada’s economy and society. Additionally, the government could explore policies that encourage international students to remain in Canada after completing their studies, thereby retaining their talent and expertise within the country. By adopting a nuanced approach, the federal government can address concerns related to the influx of international students while simultaneously preserving Canada’s appeal to exceptional individuals. Striking this delicate balance will allow Canada to continue benefiting from the contributions and talents of international students, ultimately fostering a vibrant and globally competitive knowledge economy.

What a blow! Kleenex pulling out of Canadian consumer market

Bronte Bay Subhash Sharma Business Updates Canada

Consumer facial tissue brand Kleenex, known and cherished by households across Canada, is on the brink of disappearing from store shelves. The multinational corporation responsible for its production has recently made a strategic decision to withdraw from a significant portion of its operations within the nation, spelling the end of an era for Canadian consumers. For years, Kleenex has been synonymous with comfort, reliability, and quality, making its discontinuation a major shift in the company’s business strategy and a blow to consumers who have come to rely on this trusted brand. This calculated move by the corporation reflects its determination to realign its focus and prioritize other aspects of its business.

However, the withdrawal of Kleenex from the Canadian market leaves a void that may not be easily filled. This iconic product has not only become a staple in Canadian homes but has also gained widespread recognition and trust among consumers. Its absence will undoubtedly be felt, forcing loyal customers to search for alternatives that can match the same level of quality and reliability. As competitors now have the opportunity to step in and capture the market share left by Kleenex’s departure, the future remains uncertain.

Will another facial tissue brand rise to the occasion and become the new go-to choice for Canadian consumers? Or will multiple brands attempt to fill the void, leading to a fragmented market? Only time will tell how the departure of Kleenex from the Canadian consumer landscape will reshape the industry and influence consumer preferences. In the meantime, loyal consumers are left grappling with the imminent absence of a product that has provided them with comfort and convenience.

The loss of Kleenex in Canada not only signifies the end of a beloved household name but also highlights the impact that a single brand can have on the lives of consumers. As Canadians adapt to this change, they will undoubtedly be seeking a new facial tissue brand that can live up to the standards set by Kleenex, hoping to find a suitable replacement for the product they have come to trust. Ultimately, the departure of Kleenex from the Canadian market represents a significant shift in the industry and a challenge for both consumers and competitors alike. It remains to be seen how this iconic brand’s absence will shape the future of the facial tissue market in Canada and if another brand can rise to fill the void left behind.

Top funding programs for Canadian wineries

In recent years, Canada’s wine industry has been doing well, but it is facing several challenges like climate change, not enough workers, problems in the supply chain, and many others. The government has set up special funding programs to help wine businesses deal with these challenges and stay competitive in a tough market. These programs help businesses get the latest equipment and technology, hire and train new employees, promote sustainable farming practices, work with experts and consultants, and undertake important projects like expanding facilities or developing new products.

One of the main ways government funding helps is by making it easier for wine businesses to get the equipment and technology they need. As technology keeps improving, winemakers need to stay updated to ensure the best production and quality. The funding programs help businesses access these resources, keeping them innovative and competitive. Additionally, these programs are crucial in dealing with the shortage of skilled workers in the wine industry. They offer financial help to hire and train new employees, ensuring a continuous and capable workforce, which contributes to the industry’s growth and sustainability.

Besides equipment and labor support, these funding programs also encourage sustainable practices in the wine industry. Climate change affects vineyards and grape production, posing a significant threat. The funding programs help businesses adopt environmentally-friendly farming techniques, invest in renewable energy, and improve water management. This way, they help secure the industry’s future and reduce its environmental impact. Moreover, the programs understand the importance of collaboration and expertise in overcoming challenges. They provide financial aid for hiring external support like consultants, researchers, and industry experts, fostering innovation, problem-solving, and continuous improvement.

Finally, the government funding programs support wine businesses in undertaking important projects that contribute to the industry’s development. This includes expanding production facilities, enhancing marketing and branding strategies, or developing new product lines. The programs offer financial assistance and guidance to ensure the successful execution of these initiatives. In conclusion, although Canada’s wine industry is currently doing well, it faces several challenges. However, with the help of government funding programs, wine businesses can navigate these challenges effectively. By facilitating equipment acquisition, addressing labor shortages, promoting sustainability, fostering collaboration, and assisting with critical projects, these programs play a vital role in ensuring the continued success and growth of Canada’s wine industry.

Many Canadians believe companies are using inflation as an excuse to gouge them

Canada's inflation rate had been a cause for concern as it went through a tumultuous phase with prices soaring uncontrollably

A recent study by the Bank of Canada investigated how corporations have been adjusting their prices in response to inflation. The research aimed to determine whether companies were using inflation as an excuse to increase their prices unnecessarily and boost their profits. Surprisingly, the study found that corporations have not been taking advantage of inflation to charge consumers unfairly high prices. Instead, they have been adjusting their prices reasonably, based on the actual impact of inflation. This challenges the common belief that companies usually exploit economic situations for their own benefit.

Despite these findings, many people remain skeptical and unconvinced that corporations have been acting in the best interests of consumers during inflationary times. This skepticism may be due to past instances where companies were accused of price gouging or using inflation as an excuse to maximize profits. Additionally, people may have personally observed price increases that seemed to exceed the level of inflation, leading them to believe that corporations are exploiting economic conditions at the expense of ordinary consumers. The complexity of pricing strategies and lack of transparency in corporate decision-making processes further contribute to the public’s doubts.

There is a clear disconnect between the Bank of Canada’s research findings and the public’s perception of how corporations behave during inflation. To bridge this gap, there needs to be more discussion and open dialogue between economists and the public. Transparent communication and a better understanding of the intricacies of pricing strategies are necessary to reach a consensus on whether corporations are truly refraining from exploiting inflation for their own gain.

The Bank of Canada’s research challenges the widely held belief that corporations unjustly raise prices during inflation. However, despite these findings, there is still skepticism among the public, who cite past experiences and a general mistrust of corporate practices as reasons for their doubts. To resolve this discrepancy, there needs to be ongoing dialogue and a more comprehensive understanding of pricing strategies. This will help establish a clearer picture of how corporations behave during inflation and whether they are acting in the best interests of consumers.

Understanding the wealth Gap: causes and consequences

Bronte Bay Subhash Sharma Business Update Canada Wealth Economy The growing wealth gap is mainly due to the uneven distribution of resources and opportunities. Often, people from marginalized communities do not have access to good education, healthcare, and job opportunities. This leads to a cycle of poverty and limited chances of improving their economic situation. Additionally, when wealth is concentrated in the hands of a few individuals or corporations, it limits competition and economic growth. As the rich get richer, they gain more control over political decisions, leading to policies that benefit them and increase the wealth gap.

The impact of a growing wealth gap affects many areas of society. It increases social inequality, leading to divisions based on wealth and increasing social tensions. This can lead to higher crime rates, social unrest, and a breakdown of social cohesion. Also, the wealth gap has serious effects on public health. People from lower socio-economic backgrounds often have limited access to quality healthcare and struggle to afford basic necessities like nutritious food and safe housing. This can lead to poorer health outcomes and higher rates of chronic diseases, further perpetuating the cycle of poverty.

Economically, the wealth gap hinders economic growth and stability. When a large portion of the population is struggling financially, consumer demand decreases, leading to reduced economic activity. This can result in a slow economy and hinder the overall prosperity of a nation. To address the growing wealth gap, a comprehensive approach is needed. Governments must implement policies that promote economic equality, such as progressive taxation, investment in education and healthcare, and measures to ensure fair wages and working conditions. Also, there needs to be a focus on empowering marginalized communities by providing equal opportunities for education and employment.

The growing wealth gap in Canada is a serious issue that requires immediate attention and action. Its consequences affect individuals, groups, and the entire society on multiple levels. By addressing the root causes and implementing targeted solutions, it is possible to create a more equitable and inclusive society for all Canadians.

Business Council warns about debt costs as federal cabinet meets

Bronte Bay Subhash Sharma Canada Business Update

Prime Minister Justin Trudeau and cabinet ministers are meeting in Charlottetown, and the Canadian business community is increasingly worried about the rising cost of federal debt. With the ongoing pandemic causing economic problems, the growing debt is a critical issue that cannot be ignored. Although the government’s support for businesses and individuals during these tough times has been vital, the rising debt is causing concern within the business sector. There is a growing fear that the escalating debt may obstruct Canada’s long-term economic recovery and hinder future growth prospects.

The business community recognizes the need for government spending during crises but emphasizes the importance of balancing economic support and managing the nation’s fiscal health. As the debt grows, there are concerns about potential consequences, such as higher taxes, reduced government spending in key sectors, and limited access to credit for businesses. Additionally, the increasing debt raises questions about the sustainability of social programs and public services that Canadians heavily depend on. There is a fear that if the debt becomes unmanageable, it may lead to cuts in essential services, negatively affecting the quality of life for citizens nationwide.

To address these concerns, the business community is urging the Prime Minister and his cabinet to prioritize fiscal responsibility and implement measures to gradually reduce federal debt. This might involve exploring ways to increase revenue through economic growth, carefully evaluating government spending, and promoting policies that attract investment and stimulate job creation. It is crucial for the government to collaborate with the business community, economists, and other stakeholders to develop a comprehensive plan that ensures Canada’s long-term economic stability. Addressing federal debt proactively can instill confidence in the business sector, reassuring them that Canada remains an attractive place to invest and do business.

As Prime Minister Justin Trudeau and his cabinet ministers convene in Charlottetown, the concerns of the business community about the rising cost of federal debt must be addressed. The government needs to find a delicate balance between supporting the economy during these challenging times and addressing the long-term implications of increasing debt. By taking decisive action, Canada can pave the way for a sustainable recovery that safeguards its citizens’ well-being and secures a prosperous future for generations to come.

Labour market key for Bank of Canada interest rate decisions

Bronte Bay Subhash Sharma Canada Economy InflationThe Bank of Canada is working hard to manage inflation and keep it stable at 2 percent, and CIBC economists highlight the importance of labor market indicators in influencing the central bank’s decisions on pausing its tightening cycle and possibly lowering interest rates. These indicators are essential for shaping the Bank of Canada’s monetary policy as they offer important insights into the economy’s overall health and stability. By keeping a close eye on employment rates, wage growth, job creation, and workforce participation, the central bank can assess the labor market’s strength and resilience.

If the indicators show a slowdown or weakness in the labor market, it could indicate a potential drop in economic activity and a reduced capacity for inflationary pressures. In this case, the Bank of Canada may decide to stop its tightening cycle, which involves gradually increasing interest rates to control inflation, and instead, consider reducing interest rates. Lowering interest rates can boost economic growth by making borrowing cheaper, encouraging consumer spending and investment. When borrowing costs are lower, businesses are more likely to expand, leading to more job opportunities and better labor market conditions.

Moreover, a strong labor market can lead to higher consumer confidence, resulting in increased spending and economic activity. As a result, the Bank of Canada closely monitors labor market indicators to ensure they are in line with its inflation target and overall economic stability. It’s important to note that labor market indicators are not the only factor in the Bank of Canada’s decisions. The central bank also considers other macroeconomic factors like GDP growth, consumer price index (CPI) inflation, and global economic trends. However, labor market indicators offer valuable insights into the economy’s dynamics and play a significant role in shaping the central bank’s monetary policy decisions.

As the Bank of Canada aims to maintain a steady 2 percent inflation, labor market indicators are crucial in determining the central bank’s decision to pause its tightening cycle and potentially lower interest rates. By closely monitoring these indicators, the Bank of Canada can ensure the economy’s overall health and stability, supporting sustainable economic growth and maintaining price stability.

Canada likely sitting on the largest housing bubble of all time

Diving into the world of real estate investment can be both thrilling and overwhelming for newcomers.

Colmar, a global strategy expert and partner at MRB Partners, recently expressed deep concerns about the Canadian housing market in an interview with BNN Bloomberg. He pointed out the alarming level of debt Canadians have accumulated compared to their incomes, warning that this situation could potentially lead to a market collapse. The Canadian housing market has been a significant driver of economic growth in recent years. However, this success has led Canadians to take on substantial debt to afford homes, heavily relying on mortgages for financing. With mortgage rates possibly continuing to rise, the financial vulnerability of many Canadians has become increasingly evident.

Colmar’s analysis suggests that the current debt-to-income ratio in Canada has reached a critical point, leaving individuals and households highly exposed to any further increases in mortgage rates. As interest rates climb, monthly mortgage payments will also rise, potentially placing a significant burden on homeowners already stretched financially. The consequences of this mounting debt burden could be severe. Many Canadians may find themselves unable to meet their mortgage obligations, leading to a surge in defaults and foreclosures. This scenario would not only have grave implications for individual households but could also create a ripple effect throughout the entire housing market, causing widespread financial instability.

Colmar’s warning serves as a wake-up call, urging policymakers and Canadians to take immediate action to address this alarming situation. Implementing measures such as stricter lending regulations, enhanced financial education, and responsible borrowing practices are necessary to mitigate the risks associated with excessive debt. If these precautions are not taken, the Canadian housing market, once seen as a pillar of economic strength, may crumble under the weight of unsustainable debt, causing widespread financial distress and potentially triggering a broader economic downturn.

It is crucial for individuals, financial institutions, and the government to collaborate and find sustainable solutions to alleviate the strain on the Canadian housing market. By doing so, they can work towards safeguarding the financial well-being of Canadians, promoting stability, and ensuring the long-term health of the housing market.

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