Along with the lingering impact of the pandemic, Russia’s unprovoked invasion of Ukraine will prolong supply chain disruptions and keep inflation elevated for longer than previously expected.
TORONTO — A new forecast by the Canadian Manufacturers & Exporters (CME) shows the sector is contributing to Canada’s post-pandemic economic recovery but its efforts at doing even more are limited by the ongoing supply disruptions and labour and skills shortages.
Forecast highlights include:
- After bouncing back with an impressive 4.6 per cent gain in 2021, Canada’s economy is expected to grow by an additional 4.2 per cent this year and 2.7 per cent next year.
- While manufacturing activity has also been on the upswing, the sector’s recovery has been weaker and more drawn out than expected, attributable to ongoing supply chain disruptions and labour and skills shortages.
- Along with the lingering impact of the pandemic, Russia’s unprovoked invasion of Ukraine will prolong supply chain disruptions and keep inflation elevated for longer than previously expected, continuing to weigh on the manufacturing sector’s near-term growth prospects. After reaching 4.5 per cent in 2021, real manufacturing output growth is forecast to slow to 3.5 per cent in 2022 and to 3.2 per cent in 2023.
- Looking beyond these near-term challenges, Canada is headed for a long-term future of low growth and stagnant living standards unless it reverses years of weak investment and lacklustre productivity growth.
“By most measures, Canada’s recovery from the pandemic has been impressive, but now is not the time to be complacent,” said Dennis Darby, CME President and CEO. “If we do not address the country’s long-term challenges, the economy will soon return to its previous slow growth path.”
Darby notes that it doesn’t have to be this way as Canada has an enormous opportunity to ensure long-term prosperity by winning back manufacturing investment from firms looking to shorten supply chains and reshore production.
“Clearly, there has never been a better time for governments to partner with industry to build a more vibrant and resilient Canadian manufacturing sector,” added Darby.
Reposted from Canadian Manufacturing