Macroeconomic Article Study: Canada's Economic Challenges

This report analyzes a macroeconomic article discussing the slow economic growth in Canada and the potential impact of the coronavirus outbreak. The article, published in CBC News, highlights concerns about the Canadian economy, including disruptions in various sectors and the country's trade relationship with China. The report connects the article's content to macroeconomic concepts such as economic growth, unemployment, trade, and GDP. It also examines the article through the lens of post-Keynesian economics, analyzing the government's role in addressing economic challenges. Furthermore, the report explores the personal connection to the issues discussed, linking the economic concerns to individual experiences as a Canadian citizen. The report considers the two big economic questions and provides references to the source material.

Running head: MACROECONOMIC ARTICLE STUDY
Macroeconomic Article Study
Name of the Student
Name of the University
Student ID

1MACROECONOMIC ARTICLE STUDY
Table of Contents
Article..............................................................................................................................................2
Summary..........................................................................................................................................2
School of economics........................................................................................................................2
Macroeconomic concepts................................................................................................................3
Analysis...........................................................................................................................................3
Personal connection.........................................................................................................................4
Link to Economic Way of Thinking................................................................................................4
Connection with Two Big Economic Questions.............................................................................5
Reference.........................................................................................................................................6
Appendix..........................................................................................................................................7

2MACROECONOMIC ARTICLE STUDY
Article
Slower economic growth could put pressure on the federal liberals
Author: Vassy Kapelos
CBC News, February 16, 2020
https://www.cbc.ca/news/politics/minority-report-issue-11-1.5465258
Summary
 The article speaks about the slow economic growth phase Canada is going through
 In 2019, Canada faced low economic growth and it will continue in 2020 due to the
outbreak of coronavirus.
 The impact of coronavirus outbreak will be high this time as China’s contribution to
global economy is about 20% compared to last SARS pandemic in 2003 (Yang et al.,
2020).
 China is the second largest importer of Canadian goods, which is why the impact of
economic slowdown of China on Canada will be significant.
 Employment condition in the country is however good so far since unemployment rate is
low.
 The combined pressure on the economy will put pressure on the liberal government in the
coming years.
School of economics
The article chosen is related to the post Keynesian economics as it speaks about policies
to improve economic growth, trade with other countries, employment and money demand in the

3MACROECONOMIC ARTICLE STUDY
economy. Therefore, it can be said that it is different from neoclassical economics as neoclassical
school of economics says that economy grows on it technology, endowment and preferences.
Macroeconomic concepts
The macroeconomic concepts related to the article are as follows:
 Economic growth
 Unemployment
 Trade
 GDP
Analysis
The article speaks about how the slow economic growth of Canada could put pressure on
the government during the time of budget making. The economy of Canada has been
experiencing slow economic growth since 2019 (Halpern, 2019). It is evident that in last quarter
of 2019 the economic growth of Canada was 0.3%. The reason behind the slow economic growth
occurred in the country was due to the disturbance occurred in the mining sector, oil, gas sector
and roadways and railways transportation sectors of the country. However, with outbreak of the
coronavirus the economic slowdown will continue in Canada (Fernandes, 2020). There are two
reason due to which coronavirus outbreak will impact the economy of Canada. Firstly, the
economy of China contributes nearly 20% of the global economy hence decline in the economy
of China will definitely affect all countries around the world including Canada (Xie et al., 2018).
Secondly, Canada exports a large amount of its produce to China and thus with decline in the
economy of China the export demand of Canada will decline significantly. This will lead to
further fall in economic growth of the country. With low economic growth, the government of

4MACROECONOMIC ARTICLE STUDY
Canada earns low revenue which increases the current deficit causing fall in government
spending (Yared, 2019). The railway blockades has led to the shutdown of rail and thus has
impacted the agricultural sector of the country. Within one week rail shutdown the agricultural
sector accrued a loss of $10 million. It is uncertain how strongly the coronavirus would spread
and impact the economy of Canada in coming days (Karabag, 2020). However, from current
situation of the economy of the country is can be said that the Liberal government would be
under considerable pressure while preparing the budget.
Personal connection
Being a citizen of Canada, slow economic growth of the country always hurts because
slow growth means less progress which further indicates less opportunity. Without proper
opportunity, it is difficult to achieve tough career goals. The outbreak of coronavirus seems to be
upcoming challenge for the country. The virus has already started spreading in Canada and this is
a big issues could be greater than the slow economic growth since it does not only hurt the
economy but also the health of citizens of a country. The article speaks about both the slow
economic growth and outbreak of corona virus and thus it is of individual interest of each and
every citizen of Canada. The country is facing two problems at the same time. With slow
economic growth, the country is not earning significant amount of revenue butt to save it from
outbreak of coronavirus it requires extra fund. Hence, this would definitely affect every citizen of
the country.

5MACROECONOMIC ARTICLE STUDY
Link to Economic Way of Thinking
Economic way of thinking studies about the choices made by people under various
conditions and policy and actions government. The concerned article does not speaks about
choices of people but put emphasis on economic policies of government as it speaks about
government spending, current deficit, trade and budget of government.
Connection with Two Big Economic Questions
The article discussed does not put enough light on choices but looking at the selection of
trading partners such as the US and China would impact the export industry production of
Canada. Therefore, it can be said that Canada tries to produce in accordance with the demand of
its trading partners.
The government of a country make choices according to its self-interest but any choice of
the government impacts the society of a country and thus it promotes social interest too.
However, if the choices was made by an individual then it might not promote any social interest.

6MACROECONOMIC ARTICLE STUDY
Reference
Fernandes, N. (2020). Economic effects of coronavirus outbreak (COVID-19) on the world
economy. Available at SSRN 3557504.
Halpern, P. J. (2019). Financing growth in Canada. Routledge.
Karabag, S. F. (2020). An Unprecedented Global Crisis! The Global, Regional, National,
Political, Economic and Commercial Impact of the Coronavirus Pandemic. Journal of
Applied Economics and Business Research, 10(1), 1-6.
Xie, C., Gao, J., Grant, J. H., & Anders, S. (2018). Examining the Canada–China agri‐food trade
relationship: Firms, trading partners, and trading volumes. Canadian Journal of
Agricultural Economics/Revue canadienne d'agroeconomie, 66(4), 539-555.
Yang, Y., Peng, F., Wang, R., Guan, K., Jiang, T., Xu, G., ... & Chang, C. (2020). The deadly
coronaviruses: The 2003 SARS pandemic and the 2020 novel coronavirus epidemic in
China. Journal of Autoimmunity, 102434.
Yared, P. (2019). Rising government debt: Causes and solutions for a decades-old trend. Journal
of Economic Perspectives, 33(2), 115-40.

7MACROECONOMIC ARTICLE STUDY
Appendix
Slower economic growth could put pressure on the federal liberals
Headlines over the past month have rightfully focused on railway blockades, plane crashes and
pandemics. There has been a lot of news and so it's understandable that some stories get
overlooked.
I want to draw your attention to a story you may have missed but is worth your attention: the
economy isn't doing that great.
Those events I mentioned — specifically the coronavirus outbreak and the railway blockades
— have an economic impact in addition to the very significant affects they have on our health
and on reconciliation respectively.
Parliament's budget watchdog, Yves Giroux, spelled it out clearly late last week, downgrading
his outlook for the Canadian economy. The last quarter of 2019 ended up with almost flat growth
at 0.3 per cent, and Giroux cut his projection for the first quarter of this year from 1.8 per cent to
1.5 per cent (which was the estimate back in November).
The slowdown last year, according to Giroux, is due to temporary disruptions in mining, oil and
gas, motor vehicle and rail transportation sectors. Lax business investment was also a factor.
The reason for the lowered expectation this year is the coronavirus outbreak.
I promise I'm not going to be all doom and gloom. Wages have seen some growth,
unemployment is still remarkably low in most provinces (not all) and the economy is growing (if
very slowly) not contracting.
The federal finance minister's read on the situation?

8MACROECONOMIC ARTICLE STUDY
"Generally, there's good reason for us to be optimistic about our situation and the economy," Bill
Morneau said last week after meeting with private sector economists in Toronto. "There are
though, as we know, always challenges ..."
Make no mistake — an economy with slow growth is a challenge; and maybe a bigger one than
Morneau is willing to admit.
First of all, less growth means less revenue for the government. As expenses ‒ for a variety of
reasons, including spending promises made during the campaign ‒ go up, less revenue isn't a
great thing (regardless of how this government does not appear bothered by the current deficit
levels, they won't be happy).
But also — what the Parliamentary Budget Officer lays out may only be cracking the surface, for
a few reasons. Giroux himself admits in his report that his estimate for how much the
coronavirus outbreak might impact the economy is "highly uncertain." Early projections are
based on modelling from SARS, which happened 17 years ago.
As Brian Kingston of the Business Council of Canada put it: "in 2003 China was responsible for
about four per cent of global GDP, they're now responsible for nearly 20 per cent … so it's a
completely different ballgame."
It's worth noting that though exports to China fell last year because of the very strained
relationship between that country and ours, China is still the second biggest destination for
Canadian exports after the United States. A slowdown in the Chinese economy will impact
Canadian exporters, that's a certainty.
And there's more. The PBO's analysis was done before the rail shutdowns started last week.
There's no firm estimate I could find quantifying the economic impact of the shutdowns, but as

9MACROECONOMIC ARTICLE STUDY
of Friday, grain farmers said they'd already lost $10 million. Remember, when Giroux
forecasted slower economic growth this year, he wasn't even taking that into account.
It will be interesting to see how the government navigates this set of economic circumstances. It's
not straightforward — there's no major alarm bell; there's less growth but more jobs.
My guess is that means Morneau and his colleagues will say more of the same thing — things
are good but there are challenges. Just like my love for chocolate and my desire to lose weight,
they'll continue to straddle the fine line between retraction and growth.
And remember — the budget is coming up, likely at the end of March. The Liberal government
will have a better idea of how much of a hit the economy is taking by then — and its decisions
in crafting the budget will have to reflect that.