Good news is on the horizon. While many experts worried that Canada’s economy would enter a recession early this year, Manitoba’s economy is expected to grow by 0.9% in 2023. The Manitoba Chambers of Commerce was pleased to host Pierre Cléroux, Vice President, Research and Chief Economist at BDC for an engaging keynote to Manitoba’s business community last week, where he, perhaps unexpectedly, shared an optimistic economic outlook.
The Chief Economist’s outlook comes on the heels of the Bank of Canada’s latest interest rate decision on January 25. The quarter of a percentage point increase was the eighth increase Canadians have faced in 10 months. The central bank’s decision to increase the policy interest rate to 4.50% was to control inflation – the increase in the general price level of goods and services in our economy.
Inflation has increased sharply across the world over the past year. Global supply challenges, elevated commodity prices, and a war in Ukraine all contributed to inflation in Canada. When prices go up, money can’t buy as much as it used to. This loss of purchasing power hurts everyone’s standard of living.
When inflation is high, consumers, businesses, and investors are uncertain about what their costs will be from one day to the next. High inflation is often unstable and unpredictable, and that keeps the economy from performing at its best. Manitobans have felt the impact of high inflation this past year, including higher prices for groceries, fuel, and rent. Inflation is especially challenging for people on fixed incomes, and it’s bad for business.
The Bank of Canada aims to keep inflation at the 2 per cent midpoint of an inflation-control target range of 1 to 3 per cent. The pandemic and a war have had a profound impact on lives and the economy, and inflation reached a high of 8.1% in June. In this year’s Manitoba Business Outlook Survey, Manitoba businesses told us that inflation is the biggest barrier to economic recovery, followed by supply chain concerns, and acute labour shortages. Inflation has been especially damaging for SMEs, 83% of which who identified inflation as their most significant barrier to recovery.
The good news is that interest rate increases have done their job, and inflation is starting to come down. Accordingly, Cléroux forecasts that after eight consecutive interest rate increases, interest rates will hold steady at 4.50% for the next several months, and that we will see the rate decrease thereafter.
Despite this optimism, Cléroux acknowledged the challenges businesses are facing with labour shortages. We have more jobs than people, and 20% of our workforce will retire over the next 10 years. According to the Chief Economist, this means that we’ll have to manage our human resources differently over the next several years. There is an important opportunity for technology here. While it does not replace people, it can replace tasks. This is the future for our country.
Accordingly, the Manitoba Chambers of Commerce has launched the Digital Services Program to help businesses get to where they want and need to be The way Manitobans do business has evolved. Companies, customers, and employees are becoming increasingly digitized and businesses need a solid digital foundation to stay competitive.
This program provides Manitoba businesses with access to expert Digital Services Providers who deliver Business Technology Assessments, Digital Legal Services, or Cybersecurity Audits. These foundational services can help you transform your operations and thrive in today’s market.
To learn more about how the Manitoba Chambers of Commerce can help your business, book a meeting with DMI Account Manager, Clare Buelow today.