City of Surrey's 2021 - 2025 Financial Plan

ECONOMIC OVERVIEW

CANADA The vaccination program in Canada is ramping up after a supply disruption in February. Barring any further issues, those willing should be inoculated by September 2021. Canada has delivered at least one dose of vaccine to 29.3% of Canadians with only 2.7% of Canadians being fully vaccinated. Canada added 259,000 jobs in February and the unemployment rate fell to 8.2%, the lowest reading since March 2020. The easing of restrictions in Ontario and Quebec last December allowed for many non-essential businesses to reopen. Compared to February 2020, Canada’s job market is 599,100 jobs short of pre-pandemic levels. Young workers and women continue to be disproportionately impacted by job losses. The Canadian economy has been resilient throughout the pandemic due to unprecedented income support provided by the Federal government. The Bank of Canada (“BOC”) held its key interest rate at 0.25% in March. The BOC indicated that its interest rate will remain static at this level until inflation returns to the target of 2%, which is not anticipated until 2023. The central bank has expressed warning that the Canadian housing market is showing early signs of overheating with homes prices increasing rapidly outside of city centers. Economists are cautioning that the BOC’s forward leading guidance of zero interest rate hikes in the short and medium term is leading homebuyers to overextend their finances. The BOC advises that the pace of economic recovery will depend on the path the pandemic takes. Uncertainties around the spread of COVID-19 variants, delays in vaccine rollout, and further lockdowns are all considered economic headwinds. Due to the increased number of COVID-19 cases, British Columbia (“BC”), Quebec and Ontario reimposed restrictions in an attempt to curb social interactions. The measures in Ontario and Quebec are more stringent than those in BC. Ontario’s government has closed schools in some regions and implemented a province-wide stay-at-home order. With more than two years elapsed since the last federal budget, the Trudeau government is set to release its most recent budget in April 2021. The Parliamentary Budget Office (“PBO”)

estimates that the federal deficit will

Interest Rates 5Year Trend

4.5

reach $382 billion. The federal budget should provide details of pandemic spending to date and outline the future economic recovery spending plan. The federal government has plans to spend between $70 to $100 billion over the coming years.

4.0

3.5

3.0

2.5

2.0

1.5

1.0

0.5

0.0

Prime Rate

BOC Key Interest Rate

Source: Bank of Canada

City of Surrey | 2021—2025 Financial Plan | Financial Overview

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