Every week here at the Current we bring you the biggest business stories from around the world. This week: Canada’s deficit, low growth in Canada and abroad, low loonie on the horizon, Canada’s gender wage gap, Chipotle shares fall, Japan stocks hit new highs.
Finance Canada has amended its forecasted budget surplus of $2.3 billion to a $3 billion deficit. The predicted deficit does not factor in the cost of the newly-elected Liberal Government’s campaign promises. During the campaign Trudeau had promised to run deficits of $10 billion in order to finance infrastructure projects and other campaign promises. That prediction however was based on the previously forecasted budget surplus and new projections show the government could run consecutive deficits of $14 billion – just 0.7% of GDP, far below the 2.8% deficit run annually by the US government.
Canada is still on course for growth, but only at a modest rate of 1.2%. The International Monetary Fund has also revised its global growth forecast to just 3.1% – the lowest since 2009 when much of the world was still recovering from recession. Plummeting oil prices hit the petroleum industry hard and stunted investment across the Canadian economy.
Finance Canada has also downgraded the outlook for the loonie from an average of 83 cents USD until 2019 to just 79 cents USD over the same time period. The loonie is currently trading around 75 cents USD. A lower loonie could prove to be beneficial to Canadian exporters and manufacturers, but will likely continue to be a burden on frequent travellers to the US. With a potential Fed rate rise on the horizon, the value of the loonie could shrink even further against the greenback.
According to the World Economic Forum the wage gap between men and women will take another 118 years to close. Here in Canada women make on average just 82 cents for every dollar a man earns, and for the same position women earn just 72% of what men earn.
Following the tragic attacks in Paris, the country’s massive tourist industry has taken a hit. 84 million people visit Paris every year but, in addition to forced delays and cancellations, some tourists are deciding to spend their vacations elsewhere. Although the Canadian government has not issued a travel advisory, fears that there could be another attack linger.
Chipotle shares plunged 12% after 43 people contracted E. coli after eating at the Burrito chain. In response to the outbreak the company closed over 40 stores in the US Pacific Northwest. Chipotle shares are down nearly 20% this year.
Nikkei on the Rise
The Nikkei 225, a Japanese stock market index, hit a 3 month high on Friday at 19,879.81. Early losses in the day were attributed to a stronger yen which could hurt manufacturing and exports, but the market rebounded.
Shares in Square
Shares in Square, a new tech company founded and led by Twitter CEO Jack Dorsey, closed up 45% at the end of its first day of trading. The company specialises in helping businesses process credit card payments through a square shaped attachment for tablets and smartphones which can process swipes from credit cards.
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