TORONTO—A new report from RSM Canada says that disruptions due to port closures, factory shutdowns, product halts and labour shortages will likely delay a return to full production in Canada’s economy until mid-2022.
The report from the tax services provider, titled The Real Economy, Canada, also found that increased globalization and the persistent coronavirus have created another supply crisis, with Canadian businesses scrambling to locate alternative resources during the ramp-up to the holiday season.
RSM also said the property sector crisis in China, the showdown over raising the debt ceiling in the United States and disruptions to the global supply chain have all contributed to volatility in global financial conditions.
The report found imports from China, Canada’s second biggest trading partner, dropped 30.9 per cent to $3.9 billion in July, from the record high of $5.6 billion in March. The average price to ship a container from Asia Pacific increased by 63 per cent in the March-July period, while the same cost from Europe increased by 79 per cent.
Many Canadian businesses have been forced to look for alternative domestic suppliers that can compete in terms of pricing.
RSM said declining labour force participation rates and labour shortages will become a more acute problem over the next year. There was a significant increase in job vacancies this year, from 550,000 in the first quarter of 2021 to 730,000 in the second quarter.
One bright spot is the potential for growth in Canada’s green industries. The Trudeau government is expected to accelerate its climate change plan post-election, further embracing an activist approach.
Joe Brusuelas, chief economist with RSM US LLP, commented, “Businesses should prepare for disruptions as they prepare for the critical holiday season. Finding alternative domestic suppliers and adopting dynamic pricing strategies will present firms embedded in the real economy with the best approaches to contend with rising prices and the shifting composition of supply and demand.”