Insights On Canada’s Economy And Technology Market For 2022
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Insights On Canada’s Economy And Technology Market For 2022

By CIOReview | Tuesday, April 26, 2022

The pandemic has sped long-term digital transformation projects to be finished in months rather than years.

FREMONT, CA: Continued health restrictions and rising vaccination rates, together with supportive fiscal and monetary policies, are assisting Canada's economic recovery and have a beneficial downstream effect on the information and communications technology sector. In aggregate, Canadians anticipate solid economic growth of 4.1 percent in 2022 and 3-4 percent in 2023, down from 5 percent in 2021. The Bank of Canada took a positive step in tapering and ending its quantitative easing program, indicating that the Canadian economy is well on its way to recovery. Canadians have seen a resurgence on the export front as the US economy shows signs of reviving, which is great news for Canada, as the US accounts for approximately 74 percent of Canada's total exports. While this is all encouraging news, markets remain concerned about some significant risks facing 2022, including supply chain disruptions, energy restrictions, and new COVID-19 versions.

According to Tiff Macklem, Governor of the Bank of Canada, the current inflation rate is transient but not temporary. And according to the most recent data, Canada's inflation rate is currently 4.7 percent, but it is expected to rise to 5 percent by early 2022 before easing back to 2-3 percent by late 2022. The primary drivers of inflation are supply chain constraints and increasing energy prices. Generally, the central bank raises interest rates to combat inflation. To aid the economic recovery, interest rates are expected to remain low until a 2 percent inflation rate is achieved. In November, the labor sector added over 154,000 jobs, and the unemployment rate fell to 6 percent, closely matching the 2019 estimate of 5.5 percent. This is a sign of economic recovery following the recession.

In 2022, one of Canada's greatest obstacles to economic growth will be global supply chain disruptions. Consumers are spending more on commodities than before the epidemic, and the supply cannot keep up with the increased demand. Factory closures, labor shortages at transportation hubs, and rising shipping prices are wreaking havoc on the supply chain. Costs of shipping containers from outside Canada have increased significantly, in some cases by more than 50 percent, resulting in price volatility and inflation. The supply chain problems were exacerbated by November's heavy flooding in British Columbia, which blocked off the Port of Vancouver from the rest of the country due to damaged or washed-out rails and highways. Manufacturing is the primary industry affected by supply chain disruptions. For instance, a shortage of semiconductor chips is causing delays in the production of electrical gadgets and automobile components. Additionally, due to the closure of overseas textile factories manufacturing upholstery and shipping challenges, Canada's furniture supply is impacted.

Another factor contributing to inflation is an increase in gasoline and natural gas prices, which will result in an overall increase of more than 25 percent in energy prices in October 2021 compared to October 2020.

The epidemic has hastened the completion of long-term digital transformation programs, which are now being completed in months rather than years. Businesses rapidly adopt digital channels for customer interactions and integrate modern technologies into their decision-making processes. IDC forecasts that the Canadian information and communications technology sector will increase at a 4 percent rate in 2022. Cloud services, next-generation security, AI, robotics, and augmented and virtual reality will be the primary drivers of total ICT growth during the next one to two years.