b'residential sector (housing and multi-unit high-rise) should also rebound from the downturn caused by higher interest rates. THE ECONOMY AND CONSTRUCTION INDUSTRYFederal immigration in 2023 through 2025 (targeted at approximately 400,000 PICTURE FOR THE NEXT COUPLE OF YEARS REMAINSpersons per year) will also create an BLURRED BECAUSE THE ECONOMIC EFFECTS OFincreased housing demand fromnew Canadians and help with aINFLATION AND HIGHER INTEREST RATES ARE NOTresidential recovery. CLEAR AT THIS TIME. Uncertainty is definitely the economic word of the day due to the rash of wild cards that our industry and economy is dealing with in this post-pandemic era, said Ken Lancastle, MCACs COO. aged 15 to 64 are employed. In addition,this process will be complicated. TheExamples like the war in Ukraine, the real GDP is forecasted to onlycomplications include concerns aboutinflation, a lack of skilled workers and a decrease by 0.3 per cent in 2023 (versusa downturn, increased financing costs,looming recession will hamper significant -3.4 per cent forecasted in 2022) andthe cost of labour and material shortagesshort-term growth and leave us with a rebound to +1.5 per cent in 2024. in some sectors. Added to these are theGDP that is anticipated to essentially An Era of Uncertainty continuing effects of COVID-19, politicalflatline in 2023 and 2024. With the new federal budget now inissues including the war in Ukraine,He went on to say that the industry place, the issue becomes what the futuretrade issues between the U.S., China andis seeing other negative signs, such as will hold for the country and, moreIndia, and the demand for raw materialsa decline in multi-residential permits. specifically, for the construction industryworldwide that has material prices However, federal and provincial low-and the mechanical sector, includingrising again. carbon initiatives should create an increase renovation, service and maintenance.The report also states, Construction costsin renovations and retrofits for the aging The main challenge in forecasting futurein 2022 were within expected ranges,Canadian building stock.economic activity is the many disruptionsbelow the previous year, but well aboveWhere Are We Going?that have occurred before, during andhistorical growth patterns. And this yearThe economy and construction industry after COVID-19. Continuing supplycosts should moderate, falling closer topicture for the next couple of years chain problems and material coststhe average historic rate. A three- to five-are lining up with other disruptions,per-cent increase in material costs in theremains blurred because the economic including inflation, interest rates, labourUnited States and a four- to six-per-centeffects of inflation and higher interest shortages and a looming recession.rise in Canada is predicted. rates are not clear at this time. At best, These disruptions are creating an eraA Look at the Future predictions for 2023 and 2024 are of economic uncertainty. As noted byDespite the current uncertainty, lets lookrelatively modest regarding growth.Douglas Porter, Chief Economist withat what the future could hold. The 2023 BuildForce report released in BMO, in a Talking Points note datedOn the positive side, the government isApril 2023 indicates that overall 2022 April 21, 2023, There is no debate thatexpected to continue with initiatives toconstruction investment increased by this is a truly unique cycle, and its entirelyrefurbish aging infrastructure and mitigatethree per cent over 2021 levels, spurred possible that many of the traditionalby low interest rates in the first half of economic measures just cant properlyclimate change, including clean energy,the year and public sector investment capture the underlying realities. BMOsdecarbonization and net-zero emissions.in infrastructure projects. However, recent annual forecasts show, for 2023Some experts see the large governmentthe report forecasts a contraction in and 2024, respectively: growth at 2.3 perdecarbonization initiative as a strategy toinvestment in 2023 and 2024 due to cent and 3.6 per cent, CPI inflation at 2.3spend millions now to prevent spending per cent and 2.5 per cent, and overnightbillions in the future. interest rates and the completion of interest rates at 4.5 per cent and As opposed to public projects, privatea number of mega projects. By 2032, 3.88 per cent. sector investment is waning at present.construction investment is expected to In a recently released report, JLL Canada,Some experts believe supply chain,grow marginally as compared to 2022.a global real estate and investmentmaterial pricing and other issues will paleOur industry is facing complex management specialist, has forecast ain comparison to the negative effects ofchallenges, and there are simply too return to normalcy for the Canadianinflation and interest rates on this sector.many factors to consider when looking and U.S. construction sectors from theSince mid-2022, private investors haveat the future, said Lancastle. The challenges created by the pandemic,cancelled or paused many projects recently released BuildForce labour report material costs and the supply chain.after tendering because of cost and really shows a conservative attempt at Signs of this return to normalcy include aprofitability concerns. forecasting the future of the construction decline in material pricing and a lesseningThen there is the possibility of a recession,industry based on what is currently of supply chain problems in a number ofwhich is forecasted for late 2023. Many,known. If we begin to see greater product categories in late 2022.including the federal government, believeinvestment in the electrification of the However, Scott Figler, Director ofany recession occurring in the near futureeconomy as an example, the data and Research for JLL Canada, indicatedwill likely be moderate in nature. Theoutlook will change significantly. NATIONAL BULLETIN | Issue 1, 202313'