CME forecast shows manufacturing sector faces major challenges to its path to recovery
May 23, 2022 by Manufacturing AUTOMATION
Canadian Manufacturers & Exporters’ (CME) recent forecast data shows that ongoing supply chain disruptions and labour and skill shortages are negatively impacting the recovery of the manufacturing sector. The sector, however, is contributing to Canada’s overall economic recovery.
“By most measures, Canada’s recovery from the pandemic has been impressive, but now is not the time to be complacent,” said Dennis Darby, CME President and CEO. “If we do not address the country’s long-term challenges, the economy will soon return to its previous slow growth path.”
In a release by the association, Darby notes that it doesn’t have to be this way as Canada has an enormous opportunity to ensure long-term prosperity by winning back manufacturing investment from firms looking to shorten supply chains and reshore production.
Here are some highlights from the forecast:
- After bouncing back with a 4.6 percent gain in 2021, Canada’s economy is expected to grow by an additional 4.2 percent this year and 2.7 percent next year.
- While manufacturing activity has also been on the upswing, the sector’s recovery has been weaker and more drawn out than expected, attributable to ongoing supply chain disruptions and labour and skills shortages.
- Along with the lingering impact of the pandemic, Russia’s unprovoked invasion of Ukraine will prolong supply chain disruptions and keep inflation elevated for longer than previously expected, continuing to weigh on the manufacturing sector’s near-term growth prospects. After reaching 4.5 percent in 2021, real manufacturing output growth is forecast to slow to 3.5 percent in 2022 and to 3.2 percent in 2023.
- Looking beyond these near-term challenges, Canada is headed for a long-term future of low growth and stagnant living standards unless it reverses years of weak investment and lacklustre productivity growth.
“Clearly, there has never been a better time for governments to partner with industry to build a more vibrant and resilient Canadian manufacturing sector,” noted Darby.