Canada’s GDP grew a scant 1 percent in this year’s second quarter, Statistics Canada reported, slower than the 3.1 percent posted in the first quarter and below the Bank of Canada’s 1.5-percent forecast.
Initial data shows the economy retreated 0.2 percent in June after expanding 0.3 percent in May and 0.1 percent in April. June’s slump was led by the manufacturing and wholesale sectors.
The central bank has forecast 1-percent growth for the balance of this year, due to weakened consumer spending after households with variable-rate mortgages—a large share of the country’s homeowners—are forced to adjust or refinance at higher interest rates.
Also, the same higher interest rates will hobble business investment, central bank governor Tiff Macklen warned in a public statement, adding that the global economic slowdown will cut Canada’s export revenue.
However, the real estate market remains robust: the sector’s business activity added 7.6 percent in May, with increased home sales in most of Canada’s largest metro areas.
TRENDPOST: To illustrate that hidden dangers of the Canadian economy that were created by the draconian COVID War lockdowns, some 250,000 Canadian businesses that received Canadian Emergency Business Account loans during the COVID War are likely to miss the 31 December repayment deadline and are at risk of closing, the Canadian Federation of Independent Business (CFIB) estimated last week.
Some of the businesses report that conditions are worse now than during the COVID era, with costs and interest rates both higher, while trade has not increased enough to keep up.
“We have close to $15,000 to pay back,” one business owner told the CFIB’s Financial Post. “We just can’t come up with that money right now without taking on additional debt. We’re all struggling so badly that most of us are barely hanging on.”
The government program offered loans of up to $60,000 to small businesses. Those repaying the loan by the deadline would be forgiven up to $20,000 of the debt; those unable to pay will be charged 5 percent annual interest on the unpaid balance.
About 900,000 businesses borrowed under the program. Some told the CFIB that they would need to borrow other money to pay off the loans, with the new debt posing a new threat to their survival.
In a CFIB survey, more than 40 percent of the 6,000 businesses polled are likely to miss the deadline; another 23 percent said they would repay the debt but that doing so would be a struggle.
Being unable to meet the deadline is likely to have a worse effect on rural locales than metro areas, some have said.
In the town of South Algonquin, Ont., which depends on tourist visits to Algonquin Provincial Park, six businesses are for sale. “That’s a lot for a very small community” of about 1,000 permanent residents, one business owner noted.
High gas prices and mortgage interest rates have canceled vacations for a portion of the population that used to visit, she said.
Businesses are urging the government to extend the repayment deadline for two years.