Scotiabank’s Rebekah Younger on Canada’s financial system in 2024

As Scotiabank’s Rebekah Younger analyzes what’s forward for Canada’s financial system as 2024 unfolds, it’s clear that she sees “no fast fixes” on the horizon.

Whether or not it’s Canadian inflation, housing, immigration, financial progress, or productiveness, Younger, as Scotiabank’s first head of Inclusion and Resilience Economics, is measuring intently how governments in any respect ranges and leaders within the financial system plan and implement with the intention to keep away from a recession, decrease rates of interest, handle bold immigration targets, increase productiveness and construct a lot wanted, overdue housing.

What does she forecast earlier than her participation in Put together for Canada’s upcoming February Canadian Connections Summit 2024?

Canada, observes Younger,  is “good at dividing up the pie, however we’ve not discovered the way to develop it.”

Offering thought management on Canada’s financial system

Younger’s thought management focus at Scotiabank since 2019 has centred on improved well-being shared broadly all through Canadian society. 

She’s additionally introduced elevated consciousness to Scotiabank’s initiatives, equivalent to Web-Zero Pathway and ScotiaRISE.

Younger began at Scotiabank as Director of Fiscal & Provincial Economics, specializing in provincial and federal financial and financial forecasts, public coverage points and the world auto sector.

Immigration is a component of a bigger, advanced system

She has a B.A. in chemical engineering from McGill College, an M.Sc. in environmental coverage from the London Faculty of Economics in London, England, and an MBA from INSEAD in Fontainebleau, France, and Singapore.

Heading into her participation within the February Summit, jobs, immigration, and housing for all Canadians stay key points for her.

Her insights into immigration and the necessity to change a quickly getting old (and retiring) Canadian workforce each reveal and remind, as she says beneath,  that “immigration is a part of a a lot bigger and sophisticated system.”

Right here’s what she needed to say to us about  Canada’s financial system and 2024 prematurely of our upcoming February Canadian Connections Summit 2024: 

You lately wrote after the federal authorities’s 2023 Fall Financial Assertion that “Canada wants a extra fulsome and knowledgeable debate on its fiscal future. Whereas Canada’s authorities debt—basic or federal, web or gross—is fairly good and its deficits comparatively small plotted towards friends, it dangers complacency that would harbour vulnerabilities over time.” What are these vulnerabilities, and the way may they affect jobs and immigration?

Canada’s public debt remains to be comparatively low. It’s definitely increased after monumental public spending within the wake of COVID-19, however governments around the globe equally noticed debt ranges surge with spending. International bond markets could be relative: so long as we’re the least dangerous amongst friends and we’re not within the midst of a worldwide meltdown, we’re typically okay. All of
these bins are ticked proper now.

It isn’t a given these circumstances will maintain sooner or later. Canada’s extremely decentralized governance places extra powers in decrease orders of presidency, however this comes with extra fiscal pressures. Greater than half of Canada’s debt sits with provinces and municipalities the place there is no such thing as a scarcity of fiscal pressures within the pipeline from well being care to long run care to reasonably priced housing, to call only a few.

Canada additionally has a weak report of investing in longer-term progress. Its productiveness is abysmal, nonetheless, measured (or whomever faulted). All ranges and stripes of presidency have been leaning on transfers to households as a most popular coverage software to alleviate near-term pressures, whereas we’ve not but moved the dial on enabling a thriving enterprise setting. Primarily, we’re good at dividing up the pie, however we’ve not discovered the way to develop it.

These are only a few components that may erode Canadian’s high quality of life over time with no extra fulsome debate on Canada’s fiscal future. How can we work higher collectively to make use of restricted tax {dollars} to unlock stronger (and extra sustainable) progress to help increased welfare within the medium time period?

These developments must be a constructive for immigration over the long term. As massive because the immigration numbers may be, they arrive nowhere close to near closing the shortfalls left by a quickly getting old workforce in Canada.

The financial panorama modified considerably in 2023 globally and at residence. Are you able to speak about that shifting panorama?

I’ll stick my neck out and recommend there’s a sense of hope – if not reduction – that issues may begin trying up as (2024) progresses. Recall final 12 months, most market watchers rang within the new 12 months calling for a recession. That rhetoric persevered all 12 months as rates of interest appeared to simply go up and up. Scotiabank Economics was among the many few pointing to resilience, particularly in job markets and family funds, that was mitigating the worst.

That resilience is waning now, however so too is inflation. The Financial institution of Canada has roughly stated its job is finished, which has fueled a collective sense of reduction. It’s now a query of once they begin slicing rates of interest and the way shortly. We could have extra readability because the 12 months advances.

We’ll transfer on to new preoccupations. Whereas we could now not be gripped with extra charge hikes, we are going to nonetheless possible be seeing their lagged results, together with increased (however not traditionally excessive) unemployment charges. The tempo of charge cuts can be prone to be slower than some could hope. Its resting charge is unlikely to return to pre-pandemic lows. And there can be no scarcity of geo-political danger on the horizon. (We don’t must look additional than our neighbours south of the border as their presidential election season kicks off!)

How ought to we view the federal authorities’s new immigration targets, on condition that it’s the primary time for the reason that Liberals took workplace in 2015 that the degrees aren’t projected to extend?

The federal government’s intention to carry new immigration numbers flat two years out is basically a signalling train. The federal government is acknowledging the rising pains dealing with its immigration plans. Probably the most seen has been the dearth of housing to help a quickly rising inhabitants.

Canadians and newcomers alike are feeling this by still-high residence costs (even when resales have softened towards high-interest charges) and even faster-rising rents. Different infrastructure, equivalent to healthcare and academic programs, have additionally confirmed ill-prepared. Half one million (newcomers) remains to be a giant quantity – but when we discovered something final 12 months – it’s not as massive as
the precise variety of arrivals into the nation. When year-end numbers are tallied, they may little doubt present that the federal government hit its everlasting resident (PR) goal of 465k final 12 months (2023). About 35 p.c of these granted PR standing are already within the nation.

In the meantime, inhabitants progress will possible land someplace nearer to 1.2 mn. That math suggests solely a couple of quarter of Canada’s inhabitants progress is coming from PRs, with the stability principally coming from non-permanent streams, together with worldwide college students and non permanent international employees.

All ranges of presidency (and different stakeholders, together with educational establishments and companies) nonetheless have their work minimize out for them. Canada must urgently enhance these quick bottlenecks to make sure that the nation can nonetheless profit from the longer-term benefits of a rising and numerous labour drive.

Immigration Minister Marc Miller has additionally introduced a broader plan for enhancing the immigration system. What do you assume he’s making an attempt to obtain?

Broadly talking, the ‘plan’ is welcomed and overdue. The vary of measures set out by the federal immigration minister displays that immigration is a part of a a lot bigger and sophisticated system. The plan acknowledges, for instance, that the settlement expertise of newcomers must be improved. It acknowledges that there must be higher alignment
and integration of abilities and labour market wants. It additionally concedes that coordination and collaboration is important.

The time period ‘plan’ is probably a misnomer for what’s nearer to a framework. It gives a construction to weigh trade-offs of typically competing coverage goals. It additionally allows completely different companions to see the place they match. Positively, it seems to be evergreen, as we’ve seen a sequence of latest measures introduced for the reason that plan was unveiled final Fall. Extra are
nonetheless possible wanted.

Implementation can be key. There’s nonetheless the potential for unintended penalties in a number of the measures. Additionally, the federal authorities and IRCC, particularly, maintain few levers throughout most of the desired actions and outcomes. The intent and dedication are there on the highest degree, however proof can be in execution.

Inflation (other than housing inflation) seems to be slowing. What does that imply for the price of residing in Canada? And do you see a manner, within the brief time period, to “tame” housing inflation, notably lease costs?

Inflation is lastly beginning to strategy one thing extra ‘regular.’ We at the moment are seeing numbers that sit inside the Financial institution of Canada’s goal vary of 1 to three p.c. However we’re not out of the woods but. We’ll possible solely see that mid-point at 2 p.c by this 12 months, with numerous volatility within the meantime. This may maintain the Financial institution of Canada on the sting of its seat at the very least early this 12 months.

Softening value appreciation ought to alleviate some price of residing pressures, however it received’t clear up them. Be mindful, costs are growing, simply extra slowly, and ranges are nonetheless excessive. Throughout a complete vary of services, we’re not prone to see pre-pandemic costs once more. Fortuitously, rising wages are – and ultimately, rate of interest cuts ought to – present additional reduction to Canadians. Sadly, there is no such thing as a fast repair to housing affordability. Lacklustre provide towards a rising inhabitants has been years within the making and will even worsen as rates of interest ease. It would take concerted and sustained effort throughout the spectrum of housing options to drive significant outcomes. This may take time.

What do you see because the positives shaping up for Canada’s financial system in 2024?

Perspective and endurance are warranted. Financial exercise will possible transfer sideways for a lot of the 12 months. Rates of interest ought to come down, however perhaps not as shortly as hoped. Nevertheless it may have been worse and nonetheless may very well be worse. We have to get by this vital slowdown to reaffirm Canada’s long-standing fame for low, steady and predictable inflation. That is good for Canadians and the financial system in the long term.

Steve Tustin is the Editor/Curator for Leases for Newcomers and contributing editor for Put together for Canada. He’s the previous managing editor of Storeys.com and a former senior editor at each the Globe and Mail and the Toronto Star.

*Put together for Canada used no AI-generated content material within the writing of this story, and all sources are cited and credited the place potential.

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