What the Experts Say About the economy for 2019 in the Year of the Pig.
As we make the turn in the new year and we chart out the course for our business in 2019, we are experiencing a period of global trade disruptions in 2019 that may last well into the year. We all know that the USA economy drives global economic growth and their domestic policy of tax cuts and fiscal stimulus has the US economy growing and has reach full employment the ultimate goal of any economic policy. But it is predicted that there will be a cooling off period in 2019 as the economy’s growth will slow down a bit. The unemployment rate is at a 40 year low in Canada at 6% with labour shortages in some sectors.
The first half of 2018 had the economy growing at a 4% clip but the second half saw a slowdown that will most likely carry into the first half of 2019 as the Mexico and Canada free trade agreements are ratified with the USA and then the markets will reset with the new trade rules. The rise in the minimum wage in Ontario most likely caused a pause for business investment as they reset their business model with the new additional costs. Even with these increased wages 40% of business had trouble filling jobs according to a BDC survey. Some companies talked to also had tough endings in 2018 as the slowdown or pause in the economy took hold.
The BDC estimates the Canadian economy will grow by 2% in 2019 with employment at full capacity. The National Bank has a more cautious forecast of 1.8% in 2019 as the oil patch has record inventories with low prices and lower consumer spending. Deloitte Canada has the same cautious approach and states.“Consumption-led growth in Canada is coming to an end, cooling economic growth to a sustainable pace, but headwinds loom”. Deloitte Canada says after a growth rate of 3% in 2017 the pace of economic growth in Canada is projected to slow to slightly below 2.0 percent in 2019 and drop to 1.4 percent in 2020. Canada’s GNP in 2017 was $1.679 trillion USD and 2% growth is worth $34 Billion still a sizeable number.
The cost of doing business will also be higher in 2019 as CPP premiums will increase; federal carbon taxes will hit business in Saskatchewan, Manitoba, Ontario and New Brunswick: and changes to tax laws on passive investment income over $50,000 that will affect small business.
This year is the year of the Pig in the Chinese Lunar calendar (February 5) and according to Chinese astrology 2019 is a great year to make money and a good year to invest. 2019 is going to be full of joy, a year of friendship and love for all the zodiac signs; an auspicious year because the Pig attracts success in all the spheres of life. So perhaps it s good time to invest in your business this year to help it prosper in 2019.