Canadian Economic News, March 2022 Edition

COVID-19 timeline

• The Government of the Northwest Territories announced on March 1st it had extended the territory-wide Public Health Emergency until March 15th. On March 15th, the Public Health Emergency was extended until March 29th. On March 31st, the Government announced the Public Health Emergency and associated public health orders would be lifted on April 1st.
• The Government of Nunavut announced on March 3rd it had extended the territory's public health emergency until March 17th. On March 17th, the public health emergency was extended until March 31st. On March 31st, the Government extended the public health emergency until April 14th.
• The Government of Nova Scotia announced on March 4th it was renewing the state of emergency, effective March 6th, and that the state of emergency would end on March 20th.
• The Government of the Yukon announced on March 16th it was ending the State of Emergency in response to COVID-19 effective March 18th.

Selected COVID-19 responses

• The Government of Ontario announced that the following changes to public health and workplace safety measures are in effect as of March 1st:
  • Capacity limits have been lifted in all indoor public settings;
  • Proof of vaccination requirements have been lifted;
    • Businesses and organizations may choose to require proof of vaccination upon entry; and
  • Other protective measures, such as mask/face covering requirements and passive screening of patrons remain in place.
• On March 9th, the Government announced it would remove the mandatory masking requirement for most settings on March 21st.
• On March 1st, the Government of Alberta announced that step two of reopening was now in effect and that:
  • Capacity limits are lifted for all venues;
  • Limits on social gatherings are removed;
  • Restrictions on interactive activities, liquor service and operating hours are lifted;
  • Remaining provincial school requirements are removed;
  • Mandatory work-from-home requirement is removed; and
  • The provincial mask mandate is lifted in most settings.
• On March 1st, the Government of Manitoba reminded residents that new public health orders had come into effect that remove all remaining proof of vaccination requirements for public places.
• On March 10th, the Government announced that public health orders requiring masks in public places ends on March 15th.
• On March 14th, the Government announced that the province would be lifting its remaining public health orders and restrictions effective March 15th. The Government also said that public health would no longer require people who test positive for COVID-19 to isolate.
• On March 2nd, the Government of the Yukon announced that effective March 4th there will no longer be limits on the size of gatherings, events, or capacity at venues. The Government also said that bars and restaurants will be able to return to normal operations.
• On March 18th, the Government announced it was lifting the requirement to wear a mask in public spaces and the requirement to show proof of vaccination to access designated settings for people who are 19 years of age or older.
• On March 2nd, the Government of Quebec announced that the easing of measures scheduled for March 14th would now come into effect on March 12th, including:
  • 100% capacity in all public places;
  • Return to normal business hours for restaurants, bars, taverns, and casinos;
  • No restriction on the number of participants for activities of a social nature in a rented room.
• The Government also said that in addition, it will no longer be necessary to present the vaccination passport to access places that were covered by this measure.
• On March 4th, the Government of Nova Scotia announced that Phase two of the province's reopening plan would begin and that effective March 7th:
  • Personal services (like hair salons, barber shops, spas, nail salons, and body art establishments) can operate at 100% capacity;
  • Restaurants and liquor licensed establishments can operate at 75% capacity;
  • Retail stores can operate at maximum capacity;
  • Festivals, special events, and arts and culture events can have 75% of the venue's capacity (indoor and outdoor);
  • Informal gatherings with household members and close social contacts can have up to 25 people indoors and up to 50 people outdoors;
  • Businesses and organizations offering indoor recreation and leisure activities (like climbing facilities, dance classes, escape rooms, indoor arcades, indoor play spaces, and music lessons) can operate at 75% of the venue's capacity (indoor and outdoor);
  • Fitness establishments (like gyms and yoga studios) and sport and recreation facilities (like pools, arenas, tennis courts, and large multipurpose recreation facilities) can operate at 75% of the venue's capacity;
  • Movie theatres can operate at 75% of the theatre's capacity; and
  • Museums, libraries, and the Art Gallery of Nova Scotia can operate at maximum capacity.
• On March 18th, the Government announced that Phase three would begin and that effective March 21st:
  • There will be no gathering limits or capacity limits;
  • Physical distance will no longer be required between individuals and groups;
  • Masks will no longer be required;
  • Businesses and organizations across all sectors can resume full operations with no mandatory public health restrictions; and
  • Special events including festivals, sports, performances, meetings, training, and faith ceremonies can resume in full.
• The Government also said that masking would remain mandatory for a few more weeks in public schools.
• On March 7th, the Government of Canada announced it was putting a public health framework in place to restart cruise ship activity in Canada in April.
• On March 17th, the Government announced that effective April 1st, fully vaccinated travellers will no longer need to provide a pre-entry COVID-19 test result to enter Canada unless selected for mandatory random testing.
• On March 8th, the Government of Prince Edward Island announced that step 2 of the Moving On Plan would begin on March 17th with the following changes in place:
  • Personal gatherings of 20 people indoors and 50 people outdoors;
  • Organized gatherings of up to 75% capacity;
  • Fitness facilities, retail, museums, casinos, and libraries up to 75% capacity;
  • Organized sport and recreation activities with a maximum of 100 participants interacting over the course of a day; and
  • Universal screening at the points of entry will continue and will transition to random testing of people entering PEI.
• On March 9th, the Government of Nunavut announced the first phase of its plan towards lifting the Public Health Emergency by April 11th, and that effective March 14th, Public Health Measures in Gjoa Haven, Kugaaruk Igloolik, and Taloyoak will be as follows:
  • Outdoor gatherings increase to 50 people;
  • Indoor gatherings increase to 10 people plus household members;
  • Restaurants and licensed facilities may open at 25 people or 25% capacity, whichever is less;
  • Public indoor gatherings increase to 25 people or 50% capacity, whichever is less;
  • Gym capacity is 25 people or 50%, whichever is less;
  • Libraries, museums, and galleries capacity increases to 25 people or 50%, whichever is less;
  • Arena capacity may increase to 50 people or 50% capacity, whichever is less;
  • Team sports are permitted; and
  • Masks remain mandatory.
• The Government said that in all other communities:
  • Indoor gatherings increase to 15 people plus household members;
  • Public indoor gatherings increase to 50 people or 50% capacity, whichever is less;
  • Group counselling increased to 20 people;
  • Outdoor gatherings increase to 100 people;
  • Restaurants and licensed facilities may open at 50 people or 50% capacity, whichever is less;
  • The Iqaluit theatre may open at 50 people or 50% capacity, whichever is less;
  • Gyms and fitness centres capacity increases to 25 people or 50%, whichever is less;
  • Libraries, museums, and galleries capacity increases to 25 people or 50%, whichever is less;
  • Arena capacity increases to 50 people or 50%, whichever is less;
  • Team sports are allowed;
  • Territorial Park buildings may open;
  • All schools and daycares can open at 100% capacity;
  • Masks remain mandatory.
• On March 25th the Government announced that effective March 28th, public health measures across Nunavut will be as follows:
  • No restrictions on outdoor gatherings;
  • Indoor gatherings increase to 15 people plus household members;
  • Restaurants and licensed facilities may open to 75% capacity;
  • The Iqaluit theatre may open to 100 people or 75%  capacity, whichever is less, per screening room;
  • Public indoor gatherings increase to 100 people or 75% capacity, whichever is less;
  • Gym capacity is 25 people or 50% capacity, whichever is less;
  • Libraries, museums, and galleries capacity is 25 people or 50% capacity, whichever is less;
  • Arena capacity is 50 people or 50% capacity, whichever is less, as well as a maximum of 50 spectators;
  • All parks and park buildings may open.
• On March 10th, the Government of British Columbia announced that effective March 11th, face coverings will be optional for people in all indoor public settings and that mask use is no longer required when Kindergarten to Grade 12 students return from spring break. The Government also said that effective April 8th, showing the BC Vaccine Card proof of vaccination to access non-essential events, services, and businesses will no longer be required.
• On March 10th, the Government of New Brunswick announced it was lifting all remaining COVID-19 measures on March 14th. The Government said that residents will no longer be required to wear masks in public spaces or limit the size of gatherings and that all businesses and organizations will be permitted to operate at full capacity without the requirement for physical distancing.

Selected responses to Russia's attack on Ukraine

• On February 24th, the Government of Canada announced it was imposing new sanctions in response to Russia's invasion of Ukraine and that the Special Economic Measures (Russia) Regulations and the Special Economic Measures (Ukraine) Regulations prohibit persons in Canada and Canadians outside Canada from engaging in any activity related to any property of listed persons or providing financial or related services to them.
• On February 28th, the Government announced it would ban crude oil imports from Russia.
• On March 1st, the Government announced it was imposing new sanctions on 18 members of the Security Council of the Russian Federation and expanding existing prohibitions imposed on three Russian entities beyond the areas of sovereign debt, as announced on February 24, 2022.
• On March 2nd, the Government announced new sanctions that impose restrictions on 10 individuals from two companies in Russia's energy sector, Rosneft and Gazprom.
• On March 3rd, the Government announced it had issued the Most-Favoured-Nation tariff Withdrawal Order, removing the entitlement of Russia and Belarus to the Most-Favoured-Nation Tariff treatment under the Customs Tariff. The Government said Russia and Belarus will join North Korea as the only countries whose imports are subject to the General Tariff.
• On March 8th, the Government of the United States prohibited the importation into the United States of crude oil; petroleum; petroleum fuels, oils, and products of their distillation; liquefied natural gas; coal; and coal products from Russia.
• On March 8th, the Government of the United Kingdom announced it would phase out the import of Russian oil during the course of the year in response to the invasion of Ukraine.
• United Kingdom-based BP plc announced it will exit its 19.75% shareholding in Russia-based Rosneft Oil Company.
• United Kingdom-based Shell plc announced its intent to withdraw from its involvement in all Russian hydrocarbons, including crude oil, petroleum products, gas and liquefied natural gas (LNG) in a phased manner. Shell said that as an immediate first step, it will stop all spot purchases of Russian crude oil and shut its service stations, aviation fuels, and lubricants operations in Russia.
• Texas-based Exxon Mobil Corporation announced that in response to recent events, it was beginning the process to discontinue operations and developing steps to exit the Sakhalin-1 venture and will not invest in new developments in Russia.
• Toronto-based Kinross Gold Corporation announced it was suspending all activities at its Udinsk development project and was in the process of suspending operations at its Kupol mine.
• Montreal-based Bombardier Inc. announced it had suspended all activities with Russian clients, including all forms of technical assistance.
• Aurora, Ontario-based Magna International Inc. announced that given current conditions, it was idling its Russian operations.
• Toronto-based Colliers announced it had discontinued its business in Russia and Belarus after more than 28 years of operations.
• Toronto-based Canadian Tire Corporation announced it will temporarily pause its Helly Hansen operations in Russia, which include its retail stores, eCommerce site, and product shipments.
• Laval-based Alimentation Couche-Tard Inc. announced that effective immediately it was suspending operations of its 38 stores in Russia.

Resources

• Calgary-based Pembina Pipeline Corporation and Kohlberg Kravis Roberts & Co. L.P. (KKR) of New York announced they had entered into definitive agreements to combine their respective western Canadian natural gas processing assets into a single, new joint venture entity, including Energy Transfer LP's remaining interest in Energy Transfer Canada, for $11.4 billion. The companies' said closing is expected late in the second quarter or third quarter of 2022, subject to approval under the Competition Act (Canada) and other customary closing conditions.
• Vancouver-based Canfor Corporation announced it will implement reduced operating schedules at its Western Canadian sawmills, effective April 4th, for a minimum of four weeks. Canfor said the reduced operating schedules will impact production capacity by a minimum of 100 million board feet.
• Toronto-based Barrick Gold Corporation announced it had reached an agreement with the governments of Pakistan and Balochistan on a framework that provides for the reconstitution of the Reko Diq project, which was suspended in 2011. Barrick said it will be the operator of the project which will be granted a mining lease, exploration licence, surface rights, and a mineral agreement. Barrick also said that if all went according to plan, Reko Diq could be in production within five to six years.
• Saskatoon-based Nutrien Ltd. announced that in response to the uncertainty of potash supply from Eastern Europe, it plans to increase potash production capability to approximately 15 million tonnes in 2022, an increase of nearly one million tonnes compared to previous expectations. Nutrien said it expects a small increase in its 2022 capital expenditures and will be hiring additional employees across its network of potash mines in Saskatchewan.
• The Government of Canada announced there would be no directed commercial or bait fishing for southern Gulf spring herring and a closure of the Atlantic mackerel commercial and bait fisheries in Atlantic Canada and Quebec to give these fish stocks a chance to recover. The Government said the closures will be revisited following the next stock assessments.

Manufacturing

• Montreal-based Intertape Polymer Group Inc. announced it had entered into a definitive agreement to be acquired by an affiliate of Clearlake Capital Group, L.P. of California in an all-cash transaction valued at approximately USD $2.6 billion, including net debt. The company said the transaction is expected to close in the third quarter of 2022, subject to customary closing conditions, including receipt of shareholder, regulatory, and court approvals.
• Alliston, Ontario-based Honda of Canada Mfg. announced it had partnered with both the governments of Canada and Ontario and will invest $1.38 billion over six years to upgrade its Alliston manufacturing plants with new technologies, processes, supply chain, and vehicle research and development programs.
• Netherlands-based Stellantis N.V. and LG Energy Solution of South Korea announced they had established a joint venture company that will invest over $5.0 billion to establish operations, which will include an all-new battery manufacturing plant located in Windsor, Ontario. The companies said plant construction activities are scheduled to begin later this year with production operations planned to launch in the first quarter of 2024. The companies also said the plant will create an estimated 2,500 new jobs in Windsor and the surrounding area.

Transportation

• The Teamsters Canada Rail Conference (TCRC) on March 19th announced a work stoppage at Calgary-based Canadian Pacific Railway Ltd (CP). CP said on March 20th it was executing a shutdown of its train operations across Canada. On March 22nd, CP said it had reached an agreement with the TCRC – Train and Engine Negotiating Committee to enter into binding arbitration and that it would immediately begin working to resume normal train operations across Canada as soon as possible.
• Montreal-based Air Transat A.T. Inc. announced that starting in April, it will gradually restart flights to a total of 25 European destinations and continue to develop its services in the United States in addition to offering flights to the South and within Canada. Air Transat said that at the height of the summer season, it will operate more than 250 direct flights weekly on 69 direct routes.

Other news

• The Government of Alberta announced it will stop the collection of the provincial fuel tax, effective April 1st and provide $150 electricity rebates. The Government said it will review the collection of the fuel tax on a quarterly basis and, if required, consider reinstating collection in stages.
• The Government of the Yukon tabled its 2022-23 Budget on March 3rd, which included investments that build community infrastructure, address the climate emergency, strengthen the territory's health care system, increase affordable housing options, strengthen small businesses, and support industry and mining. The Government projects a $39.5 million surplus in 2022-2023 and real GDP growth of 9.6% in 2022.
• The Government of New Brunswick tabled its 2022-23 budget on March 22nd, which included investments in health care, senior care, education, tourism, and infrastructure as well as increases to the basic-personal amount and Low-Income Tax Reduction threshold, cuts to property taxes, and increases in public sector wages. The Government projects a $35.2 million surplus in 2022-2023 and real GDP growth of 2.2% in 2022.
• The Government of Quebec presented its Quebec Budget Plan – March 2022 on March 22nd, which included investments in health care, education, stimulating growth, pursuing environmental action, and supporting communities. The Government estimates a $6.5 billion deficit in 2022-2023 and real GDP growth of 2.7% in 2022.
• The Government of Saskatchewan tabled its 2022-23 Budget on March 23rd, which included investments in health care, education, infrastructure, and public safety. The Government forecasts a $463 million deficit in 2022-2023 and real GDP growth of 3.7% in 2022.
• The Government of Nova Scotia tabled its 2022-23 Budget on March 29th, which included investments in healthcare and mental health, long-term care, housing, education, and the environment. The Government forecasts a $506.2 million deficit in 2022-2023 and real GDP growth of 2.1% in 2022.
• The Bank of Canada increased its target for the overnight rate by 25 basis points to 0.50%. The last change in the target for the overnight rate was a 150 basis points reduction during March 2020.
• On March 2nd, TD Canada Trust, RBC Royal Bank, Scotiabank, BMO Bank of Montreal, and CIBC announced they had increased their Canadian prime lending rate by 25 basis points from 2.45% to 2.70%, effective March 3rd, 2022.
• Toronto-Based Royal Bank of Canada (RBC) announced it was acquiring Brewin Dolphin Holdings plc of the United Kingdom for approximately $2.6 billion. RBC said the transaction is expected to be completed by the end of the third quarter of 2022, subject to customary closing conditions, including regulatory approvals and Brewin Dolphin shareholder approval.

United States and other international news

• United States President Joseph R. Biden Jr. announced he was authorizing the release of 1 million barrels of oil per day for the next six months – over 180 million barrels - from the Strategic Petroleum Reserve. The President also said he was authorizing the use of the Defense Production Act to secure American supply chains for the critical materials that go into batteries for electric vehicles and the storage of renewable energy, including lithium, graphite, nickel, cobalt, and manganese.
• The U.S. Federal Open Market Committee (FOMC) raised the target range for the federal funds rate by 25 bps to 0.25% to 0.50% and said it anticipates that ongoing increases in the target range will be appropriate. The last change in the target range was a 150 basis points decrease announced in March 2020.
• The European Central Bank (ECB) announced that (i) the interest rates on the main refinancing operations, the marginal lending facility, and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.50%, respectively; (ii) monthly net purchases under the asset purchase programme (APP) will amount to €40 billion in April, €30 billion in May, and €20 billion in June; and (iii) it will discontinue net asset purchases under the pandemic emergency purchase programme (PEPP) at the end of March 2022.
• The Bank of England's Monetary Policy Committee (MPC) voted to increase the Bank Rate by 25 basis points to 0.75% and said some further modest tightening in monetary policy may be appropriate in the coming months. The last change in the Bank Rate was a 25 basis points increase in February 2022.
• The Bank of Japan (BoJ) announced it will apply a negative interest rate of -0.1% to the Policy-Rate Balances in current accounts held by financial institutions at the BoJ and that it will purchase a necessary amount of Japanese government bonds (JGBs) without setting an upper limit so that 10-year JGB yields will remain at around zero percent.
• The Reserve Bank of Australia (RBA) maintained the target for the cash rate at 0.10%. The last change in the target for the cash rate was a 15 basis points reduction in November 2020.
• The Monetary Policy and Financial Stability Committee of Norway's Norges Bank decided to raise the policy rate from 0.50% to 0.75%. The last change in the policy rate was a 25 basis points increase in December 2021.
• OPEC and non-OPEC members announced they had decided to adjust upward the monthly overall production by 0.4 mb/d for the month of April 2022.
• Nebraska-based Berkshire Hathaway and Alleghany Corporation of New York announced they had entered into a definitive agreement under which Berkshire Hathaway will acquire all outstanding Alleghany shares for a total equity value of approximately USD $11.6 billion. The companies said the transaction is expected to close in the fourth quarter of 2022, subject to customary closing conditions, including shareholder and regulatory approval.

Financial market news

• West Texas Intermediate crude oil closed at USD $100.28 per barrel on March 31st, up from a closing value of USD $95.72 at the end of February. Western Canadian Select crude oil traded in the USD $80 to $110 per barrel range throughout March. The Canadian dollar closed at 80.03 cents U.S. on March 31st, up from 78.75 cents U.S. at the end of February. The S&P/TSX composite index closed at 21,890.16 on March 31st, up from 21,126.36 at the end of February.