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The Globe and Mail asked dozens of experts about the economy in 2022. Here are the charts they think are important to watch and why

Illustration by DAVE MURRAY

Decoding 2022: The Globe asked dozens of experts – from economists and strategists to investors and academics – to make sense of the economy in the year ahead. These are the charts they think are important to watch and why.


Recovering from COVID-19

Recovery delayed

The onslaught of Omicron has upended the best-laid reopening plans and reinforced how difficult it is for policymakers, business leaders and consumers to plan a way through the COVID-19 pandemic.

Vaccinations blunted hospitalizations

in wave 4. What about this one?

Two week percentage change in cases and hospitalizations

(Data as of Dec. 30)

400%

Two week percentage change

Millions of people

40

350

35

300

30

Fully vaccinated people

250

25

7-day average of new cases (left axis)

Hospitalizations (left axis)

200

20

150

15

100

10

50

5

0

0

Wave 2

Wave 3

Wave 4

Wave 5

-50

2020-08-01

2020-12-01

2021-04-01

2021-08-01

2021-12-01

THE GLOBE AND MAIL, SOURCE: OUR WORLD IN DATA,

PUBLIC HEALTH AGENCY OF CANADA

Vaccinations blunted hospitalizations

in wave 4. What about this one?

Two week percentage change in cases and hospitalizations

(Data as of Dec. 30)

400%

Two week percentage change

Millions of people

40

350

35

300

30

Fully vaccinated people

250

25

7-day average of new cases (left axis)

Hospitalizations (left axis)

200

20

150

15

100

10

50

5

0

0

Wave 2

Wave 3

Wave 4

Wave 5

-50

2020-08-01

2020-12-01

2021-04-01

2021-08-01

2021-12-01

THE GLOBE AND MAIL, SOURCE: OUR WORLD IN DATA,

PUBLIC HEALTH AGENCY OF CANADA

Vaccinations blunted hospitalizations in wave 4. What about this one?

Two week percentage change in cases and hospitalizations

(Data as of Dec. 30)

400%

Two week percentage change

Millions of people

40

350

35

300

30

Fully vaccinated people

250

25

7-day average of new cases (left axis)

Hospitalizations (left axis)

200

20

150

15

100

10

50

5

0

0

Wave 2

Wave 3

Wave 4

Wave 5

-50

2020-08-01

2020-12-01

2021-04-01

2021-08-01

2021-12-01

THE GLOBE AND MAIL, SOURCE: OUR WORLD IN DATA, PUBLIC HEALTH AGENCY OF CANADA

Border restrictions, school closures and capacity limits are back, and that is certain to take a toll on the economy, though to what extent still remains unclear. Much will depend on how well vaccinations and booster shots keep serious illness and hospitalizations in check. The good news is that in South Africa, where Omicron was first detected in late November and where the latest wave appears to have already peaked, deaths from the variant were limited.

If the same happens here we’ll be back to where we were before Omicron, facing 2022 with a mix of hope and uncertainty: hope that life will return to some semblance of pre-pandemic normalcy, uncertainty about the impact of future variants and the economic scars incurred over the past two years.

#Freethevaccine

Recovery from COVID-19 in Canada has been surprisingly strong, thanks to the rapid development and deployment of safe and highly effective vaccines. But a concerning gap in global vaccination rates risks future health and economic disruptions. While vaccination rates are high in wealthy countries (76 of every 100 Canadians were fully vaccinated as of early December)among the 650 million people living in the world’s lowest income countries, barely more than three people per 100 are fully vaccinated. And of the 1.4 billion residents of Africa, the share is less than eight people per 100.

Overall, approximately 3.5 billion people around the world have not yet received a single dose of our most potent weapon against COVID-19. This matters for everyone, as future waves of the pandemic could be driven by mutated strains allowed to circulate elsewhere. Overcoming the pandemic in Canada requires overcoming it everywhere. That means producing, donating, and distributing many more doses. There is perhaps no more important chart to watch in 2022 than this.

Trevor Tombe, professor of economics, University of Calgary (@trevortombe)


Science will save us

Could 2022 be the year that ends the pandemic and turns COVID-19 into something much less threatening? Science could well make it so. At this time last year, 2021 production plans were pointed toward vaccinating about 3.6 billion people around the world. Despite damaged global supply chains, the world is on track to vaccinate 5.8 billion in 2021. We’ve clearly come a long way in a very short time! In addition to how behaviour and public health measures have adapted, antibody treatments appear to be more promising. These tools will complement a further massive surge in vaccine production in 2022. Even absent a running head start, current production plans for 2022 point toward having enough vaccine to fully vaccinate the entire world population, plus give one booster shot to everyone – and still have surplus. If new vaccines are required to counter new variants, then the capacity exists to pivot as needed. A new set of opportunities and challenges lies ahead for economies and markets.

Derek Holt, vice-president and head of capital markets investments, Scotiabank


Deteriorating conditions

The pandemic has taken a toll on Canadian’s mental health, but some have been harder hit than others. Older Canadians emerged from the first year of the pandemic with their mental health relatively unscathed. But adults in mid-life reported significantly worse mental health in 2020 than 2019. It is easy to blame these mental health declines on the stresses associated with pandemic: job loss, social isolation, fear of getting sick, the working from home, the online schooling, and so on. Yet mental health was in decline long before the pandemic.

Between 2015 and 2019, the percentage of 18 to 34 year old men reporting that their mental health was “fair” or “poor” more than doubled while the percentage of women increased 77 per cent. Girls 12 to 17, as well as men and women 35 to 64, have also experienced a trend toward higher risk of poor mental health. More extensive coverage through provincial health-insurance plans might help people to cope with poor mental health. But it will not address the systemic factors that are causing Canadians’ mental health to deteriorate. Moreover, these system factors might turn out to be things like unaffordable housing and systemic racism, which are hard problems to fix. But there is one thing we can all do right now: be kind to each other, and be aware of how much your friend, neighbour, colleague, student, child or grandchild may be struggling right now.

Frances Woolley, professor of economics, Carleton University (@franceswoolley)


Fighting climate change

Eye on emissions

My chart shows Canada’s greenhouse gas emissions from 1990 to 2019 (the most recent data available). Since 2015, Canada has had a target of reducing 2030 emissions by 30 per cent of 2005 levels. In 2021, however, the government announced a more ambitious 2030 target of 40 to 45 per cent. As the chart shows, our emissions aren’t yet on the desired trajectory. Federal and provincial governments have also implemented substantial carbon pricing and other regulatory policies, and announced plans for more to come. I’ll be watching this chart in 2022 because the 2020 data release will show how the pandemic and accompanying public-health responses affected greenhouse gas emissions. And I’ll continue to watch this chart in the years to come to see if Canada’s emissions begin to decrease toward our targets, old or new.

Joel Wood, associate professor, School of Business and Economics at Thompson Rivers University (@JoelWWood)


Not-so-electric EV sales

From less than one per cent of sales a few years ago, electric vehicle (EV) sales now make up five per cent of new-vehicle sales in Canada in the latest quarter of available data (Q2 of 2021). A far cry from recently released global data showing 10 per cent of new-vehicle sales around the world are electric, but the story differs significantly across the country.

Quebec and B.C. are far and away the EV leaders in the country, at nine and 10 per cent, respectively. No coincidence these two have also been the most consistent in offering point-of-sale rebates for EV purchases. The rest of Canada, at slightly more than two per cent, has only recently caught up to where it was in 2018, when EV rebates were cancelled in Ontario.

Where will these shares go in the years to come? And will the rest of Canada catch up? And what will this, and the concurrent global trend, mean for oil demand? This trend is certainly something to watch as Canada seeks to achieve its goal of 100 per cent of electric vehicle sales by 2035.

Blake Shaffer, assistant professor, department of economics and School of Public Policy, University of Calgary (@bcshaffer)


Investing in the future

Immigration is where it’s at

The pandemic continues to dominate the economic discourse, but other forces are also important. For Canada, immigration is set to be a tremendously positive influence on growth. In the short run, the federal government is targeting a 50-per-cent increase in immigration over the next few years, something that’s already becoming visible in the data. This is a key driver of growth for the Canadian economy and an important support for the housing market. Then, over the long run, the United Nations forecasts that Canada will have population growth through 2050 that not only exceeds laggards like Japan, Germany and China, but also the U.S. and even India – largely thanks to immigration.

Eric Lascelles, chief economist, RBC Global Asset Management (@RBCGAMChiefEcon)


Better protections for migrant workers

In any economic downturn, homegrown workers fare better than newcomers. This one was no different when it came to job loss, but very different when it came to the recovery phase.

The Canadian-born population is aging fast, and that shows up in this chart. Fewer people born here were working by November, 2021, than before the pandemic. (The same month in 2019 is used as the reference point, as the data are not seasonally adjusted.) This is largely due to more retirements (and an incomplete she-covery).

Canada’s job recovery is far ahead that of the U.S., but with slower wage growth. The biggest employment trend here is the spike in reliance on migrant workers. Its timing is consistent with public-policy decisions taken by the federal and Quebec governments in 2021. Migrant workers are permitted to stay in Canada for a short, fixed period. The vast majority do not transition to permanent status. Typically they lack bargaining power to ask for better wages or working conditions without risking dismissal and even deportation. They’re increasingly in demand by employers in hospitality and the care economy.

This raises important questions about how policy could and should shape the future of all workers, including landed immigrants and those born in Canada. If migrant workers become the favoured solution to deal with labour shortages, this “Nation of Immigrants” could become a very different place to live, for everyone.

Armine Yalnizyan, economist and Atkinson Fellow on the Future of Workers (@ArmineYalnizyan)


R&D is MIA

The pandemic has forced governments and businesses to increasingly rely on new ways of doing things. Innovation has therefore never been more important in ensuring long-term competitiveness and welfare for those in Canada. Yet, for the past two decades R&D spending in Canada has stagnated. A recent report from the Innovation Policy Lab at the University of Toronto’s Munk School for Global Affairs & Public Policy and the Brookfield Institute at Ryerson University shows that even Canada’s fastest growing firms have struggled in growing their R&D. Reversing this trend is crucial in ensuring long term economic sustainability for Canada.

Viet Vu, senior economist, Brookfield Institute for Innovation + Entrepreneurship (@vviet93)


Take stock for the future

We have entered a new regime where countries and companies must make their networks more resilient in a post-pandemic world, while addressing investor concerns about the energy transition, as well as social and governance risks. In our view, this will necessitate a significant effort to replace existing capital stock in OECD economies at a time when many governments are already highly indebted. The ability to retain and attract private capital will therefore be critical to avoid an abrupt transition to this new regime. Canada, as a small open economy, cannot stand still and must do a better job of growing its capital stock to take advantage of a highly successful immigration policy and harness the productive power of a growing workforce of highly skilled people. Unfortunately, growth-enhancing investment is lagging in Canada. We estimate the nonresidential private capital stock (things like buildings, plants, machinery and intellectual property owned by the private sector) contracted for the first time last year. Against this backdrop, our policymakers must find a solution to solve Canada’s investment conundrum.

Stéfane Marion, chief economist and strategist, National Bank of Canada (@StefaneMarion)


Inequality

The cost of historic treaties

A growing income penalty for First Nations

with historic treaties

Estimate of income gap

Confidence interval

$10,000

Constitution

Haida vs. B.C.

5,000

0

-5,000

-10,000

-15,000

-20,000

-25,000

-30,000

1981

1986

1991

1996

2001

2006

2011

2016

2020

the globe and mail, Source: “The Determinants and

Impacts of Historical Treaty-Making inCanada” by

Donna Feir, Rob Gillezeau and Maggie Jones (2021)

A growing income penalty for First Nations

with historic treaties

Estimate of income gap

Confidence interval

$10,000

Constitution

Haida vs. B.C.

5,000

0

-5,000

-10,000

-15,000

-20,000

-25,000

-30,000

1981

1986

1991

1996

2001

2006

2011

2016

2020

the globe and mail, Source: “The Determinants and

Impacts of Historical Treaty-Making inCanada” by

Donna Feir, Rob Gillezeau and Maggie Jones (2021)

A growing income penalty for First Nations with historic treaties

Estimate of income gap

Confidence interval

$10,000

Constitution

Haida vs. B.C.

5,000

0

-5,000

-10,000

-15,000

-20,000

-25,000

-30,000

1981

1986

1991

1996

2001

2006

2011

2016

2020

the globe and mail, Source: “The Determinants and Impacts of Historical Treaty-Making in

Canada”by Donna Feir, Rob Gillezeau and Maggie Jones (2021)

Throughout Canada, Indigenous communities regularly have lower income than non-Indigenous communities. However, there is dramatic variation across First Nations grounded in their history, location and property rights. As shown here, there’s a dramatic income penalty associated with Indigenous nations having signed a treaty with the Crown prior to the modern era. This penalty only appears after the patriation of the constitution in 1982 enshrines Indigenous title. Further, it appears to be growing with time as the courts repeatedly strengthen Indigenous rights and title over unceded lands (Delgamuukw v. BC 1997, Haida Nation v. BC 2004, Tsilhqot’in v. BC 2014). With the recent passage of UNDRIP legislation and the possible further strengthening of these rights, we will see if this income gap continues to expand in the years ahead and whether the valuation of modern treaties increases in response.

Rob Gillezeau, assistant professor of economics, University of Victoria (@robgillezeau)


Economic insecurity keeps growing

Far from being a “great equalizer” the COVID-19 pandemic has exposed and widened underlying structural inequality in Canada. Indigenous and racialized households have experienced greater economic hardship throughout the pandemic. From July 2020 to June 2021, an average of 28 per cent of Indigenous peoples and 31 per cent of racialized individuals lived in households that experienced economic insecurity, compared to 16 per cent of white individuals.

Sheila Block, senior economist, Canadian Centre for Policy Alternatives (@SheilaBlockTO)