City of Surrey's 2022-2026 Financial Plan

ECONOMIC OVERVIEW

The US has banned imports of Russian oil and the UK has announced it will phase out imports of Russian energy by the end of the year. Russia is one of the top three oil producers in the world. Additionally, Ukraine accounts for a quarter of global wheat and barley production. The geopolitical uncertainties are causing volatilities in financial markets with large swings in commodity and energy prices. Growth in energy export revenue, coupled with reduced imports, also contributed to the Ruble’s recovery. The IMF is forecasting Russia’s economy to shrink by 8.5% and Ukraine’s economy to shrink by 35% this year. There are ongoing negotiations to end the war. Russia’s demand for a ceasefire is conditioned on Ukraine giving up certain regions of its country and vowing to remain a neutral nation, meaning that it will not attempt to join the North Atlantic Treaty Organization (“NATO”). Ukraine remains steadfast that it will continue to defend its independence. UNITED STATES The US economy has been resilient during the pandemic due to large government support programs and record low interest rates. The US federal government has spent $5 trillion dollars to bolster the economy since the start of the pandemic. Individuals and families received $1.8 trillion dollars while $700 billion dollars in increased unemployment benefits were provided to workers. Businesses received $1.7 trillion dollars in aid, states and local governments received $745 billion dollars, and there was increased investment in health care of $482 billion dollars. The large-scale support contained the economic downturn to only a few months. The US unemployment rate came in at 3.6% in March, with 1.59 million jobs added in the first quarter of the year, bringing employment close to pre-pandemic levels. Job growth has averaged over 400,000 positions per month for the last eleven straight months. Wage growth in the US grew by 5.6% over the last year. Although an encouraging increase, wage gains are not keeping up with the pace of inflation. Supply chain issues along with pent up demand have increased prices. The US inflation rate hit a 40 year high coming in at 8.5% in March. To combat high oil prices, President Biden announced that the federal government will be releasing 180 million barrels of oil 0.90 0.95 1.00 CAD to USD 5 Year Trend

0.85

over the next six months in an attempt to push down oil prices.

0.80

0.75

0.70

The US central bank raised its key interest rate by 0.25% in March, the first increase in more than three years. The Fed chair conceded that inflation can no longer be viewed as transitory. 0.60 0.65

Source: Bank of Canada

City of Surrey | 2022—2026 Financial Plan | Financial Overview

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