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Economic Digest

Business Without Borders ®

Economic Digest – February 2016


Driven by low interest rates, cheap gas and pent-up demand, auto makers rejoiced in 2015 among record sales in Canada and the United States. Manufacturers delivered 1,898-million vehicles in Canada last year which was the third consecutive record sales performance. For the first time, Toyota became the largest Canadian producer in 2015 producing a record 590,723 vehicles, 23 per cent more than in 2014.  There are a record 10-million vehicles on Canadian roads that are 10 years old or older, which should keep spurring replacement demand.


The Panama Canal expansion expected to be open in the spring will allow massive new ships through the trade route and could shift the flow of goods from the US West Coast to the East Coast. However, many of the ports on the US eastern seaboard are still scrambling to accommodate the bigger ships, spending billions dredging deeper berths and expanding marine terminals in a race to compete with each other and their rivals on the West Coast. The US$5.2-billion expansion of the 77-kilometre Panama Canal more than doubles the capacity of the trade route that links the Pacific Ocean with the Caribbean Sea and the Atlantic Ocean.


Over the holiday period in Canada, 5,269,000 litres of eggnog were sold, compared with 3,292,000 for the rest of the year. Also, 176,678,000 litres of wine were sold with a value of C$1.86-billion, an average of 14.25 litres per person 15 years of age and over. 20,911,000 turkeys were produced giving 2.04 kilograms of meat available for consumption per capita.


`Around the world, governments and beverage makers are locked in a battle of taxes on sugary drinks. Hungary has been taxing them since 2011, and in 2012 the French government introduced a tax on all drinks with added sugar or artificial sweeteners. The Mexican government followed suit last year while Chile and the city of Berkley, California, introduced similar measures last year. Barbados and Dominica also followed suit last year. The drinks industry won some victories last year, seeing off proposals for taxes on sugar in several US states and persuading the Slovenian government to backtrack on plans to impose a 10 per cent tax on sweetened drinks while Denmark repealed a tax on soft drinks and ditched plans for a broader sugar tax.   


Passenger traffic is robust and profits are at record levels for Canada’s two largest airlines as they benefit from the lowest prices for airline fuel since the 2008-2009 recession. Both Air Canada and WestJet Airlines reported traffic increases through the first 11 months of 2015, 10 per cent for Air Canada and 3 per cent for WestJet. It is suggested that the key question is whether passenger growth will continue rising in 2016 to match capacity increases amid the downturn in oil prices that is helping to deliver huge cost savings but also giving airlines a currency headache and affecting traffic originating in and travelling to and from Alberta,


If Parliament approves the Trans Pacific Partnership (TPP), which includes 12 countries, it will give Canadian businesses preferred and improved access to a combined market of about 800-million people and more than US$28-trillion in economic activity. Particular benefit will go to the forestry sector which will see tariffs removed in several key TPP markets. There are tariffs of up to 6 per cent in Japan on lumber and up to 10 per cent on plywood and veneer. Malaysian tariffs are as high as 40 per cent on plywood and veneer and up to 20 per cent on joinery and carpenters’ products. Vietnamese tariffs are as high as 25 per cent on newsprint and up to 24 per cent on carton boxes and packing containers. Other products, from strand boards and paper products face a range of similar tariffs in countries such as Australia, New Zealand and Brunei.


According to a report by the Global Business Travel Association (GBTA) companies around the world will spend a record US$1.25-trillion this year on sending employees on work trips. This largely reflects growing business confidence. In the downturn following the global financial crisis, suspending foreign trips was a quick way to cut costs. 63 per cent of American firms increased their travel budgets for 2015 and a similar proportion expects to increase them for this year. Despite this, they continue to look for ways to save money and have become stingier about letting staff upgrade their flights or hotel rooms and stricter about demanding that all trips go through their centralised booking systems.


Amazon has opened a bookstore in Seattle describing it as a “physical extension” of its business. It will stock the most popular books from Amazon.com and prices will be the same as those offered online. Customers will also be able to try out Amazon devices, including Kindle and its Fire TV. The shop will stock 5,000 books with the majority chosen on the basis of customer ratings, pre-orders, sales, popularity on reader recommendations and shop customer’s assessments. It is unclear if Amazon intends to roll it out across the US.


This has now grown beyond a niche industry to become a global cash cow. However, a new study indicates that it may be doing more harm than good. Recent data show that protected areas around the globe receive eight billion visitors a year. This massive amount of nature-based and eco-tourism can be added to the long list of drivers of human-induced rapid environmental change. Over time, behavioural changes are induced when animals within protected landscapes become accustomed to the humans who take their pictures, ride or snorkel with them. This dulls their natural instincts to flee when humans are around which affects their responsiveness not only to tourists but poachers as well.


Road accidents are the leading cause of death among 15- to 29-year-olds globally according to the World Health Organization (WHO). Forty of the 50 countries with the highest road-death rates across all ages are in Africa. Traffic accidents now kill more people than malaria in many African countries, including Kenya, Ethiopia, South Africa and Sudan.  Africa’s roads are the world’s deadliest for a variety of reasons including lax enforcement of traffic rules (much of that due to rampant corruption), poor road conditions, lack of pedestrian infrastructure such as pavements and crossings, and dismal accident and emergency care, not to mention the state of the cars themselves. All African countries, except South Africa meet either none or just one of the UN’s seven main vehicle safety standards,


Long-unused and deteriorating railroad tracks in the Adirondacks have been put to use by a new tourist attraction imported from South Korea, pedal-powered rail-riding vehicles called rail bikes. The vehicles look more like go-carts, with two or four chair-like seats mounted on a steel frame that rides the rails on four steel wheels. Each rider has pedals and one controls a hand brake. The first summer on the 6-mile stretch between Saranac Lake and Lake Clear bought more than 10,000 customers paying US$25 a ride.


Despite a strong Christmas period, Broadway’s 2015 box office takings dropped US$8-million from the previous year. Industry statistics show theatres took an overall $1.354-billion compared to 2014’s total of $1.362-billion. Audience figures also saw a dip from 13.13-million people to 12.98-billion in 2015. Yet the year ended on a high as several shows including Aladdin and The Illusionists broke theatre records


Beauty giant L’Oreal has unveiled a smart skin patch that can track the skins exposure to harmful UV rays. The product will be launched this summer in 16 countries and will be available free. It contains a photosensitive blue dye, which changes colour when exposed to ultraviolet light. But, the wearer must take a photo of it and then upload it to an app to see the results. It has been developed by the firm’s tech incubator department which is a team of 25 scientists and researchers working in several cities around the world. The My UV patch, which is thinner than a plaster and lasts around five days is disposable and can be worn on any part of the body.


Total revenues for the Canadian logging industries reached C$10-billion in 2013. Total salaries and wages amounted to $325-million. The logging industries contributed $4.9-billion in revenues to British Columbia’s economy in 2013, less than half that amount in Quebec ($2.2-billion) and around $1-billion in Ontario and Alberta.


The threat posed by the development of rice and palm oil plantations to mangroves in South-East Asia has been underestimated according to a new study. Rice and oil plantations accounted for 38 per cent of mangrove deforestation between 2000 and 2012. Mangroves are salt-tolerant evergreens that grow along coastlines, rivers and deltas. They are found in more than 120 tropical and subtropical nations and the plants’ root systems have been shown to dissipate wave energy. Mangroves are important to people because they provide fish and crabs, wood and charcoal, and can help protect coastlines from erosion. Mangrove forests also store very high densities of carbon and have a role in regulating carbon in the atmosphere.


It is considered the “liquid gold” that sustains countless families who depend on the Extremaduran olive groves of central Spain. But last year, after a wave of night-time raids by mafia-backed thieves, the small-time farmers have had to mobilize to fight for their livelihoods. For example, in the 4,000-strong village of Navalvillar de Pela, where almost every family has a batch of trees, the Christmas carol service took place not in a church but at 3am gathered around a bonfire lit to keep the locals warm as they tried to defend their precious crops. Once processed olives for the best virgin oils are fetching around US$8 a kilo, a price that is further driving demand among the thieves.


China’s regulators have fined seven major international shipping companies US$65-million for price fixing after a year-long investigation. Korean, Japanese and European shipping companies that carry vehicles were found to have co-ordinated bids and routes in order to keep prices high. The fines are equivalent to 4% to 9% of the firm’s international shipping sales to and from China. Several sectors have been affected by the crackdown including automakers, dairy and technology suppliers in an attempt to keep prices down for Chinese consumers.


Over the next two decades, Britain will become the world’s fourth largest economy, leapfrogging Germany and Japan. The UK is set to become the best performing economy in the western world over the next 15 years, boosted by its leading position in global software and IT sectors. By contrast, the stagnant Italian and French economies are forecast to fall which could hold geopolitical implications for the European nations.


Documents tabled in the House of Commons recently show that federal employees reported dozens of laptops stolen last year, along with a host of other items that included tablet devices, diesel fuel, numerous other electronic devices, a C$329 set of earphones and a mysterious piece of military equipment valued at more than $280,000. There were also numerous cases of government property being vandalized or destroyed. All told, more than $1.1-million worth of public property was stolen or illegally damaged. More than $800,000 was considered lost for ever.


The Travelodge hotel chain reported some unusual belongings left throughout their hotel chain in the UK last year. Besides the predictable phone chargers, wallets and keys, guests left a manual on how to fly a plane near Gatwick airport and a Shetland pony at Ayr on the west coast of Scotland.

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