Cautious optimism as St. Catharines-Niagara economy looks to rebound - Niagara Falls Review

Forecasting a constantly changing environment like the economy can be challenging, with numerous uncertainties and risks. At any time, a new data point could come out and turn everything on its head.

Even still, the Conference Board of Canada released its forecast last week for the St. Catharines-Niagara economy, showing an anticipated growth of 4.4 per cent in 2022, followed by a 2.6 increase in 2023.

It’s an optimistic outlook, but one Viktor Cicman said is feasible, especially when compared to where the region was at the peak of the COVID-19 pandemic.

“Because of such a large decline that happened in 2020, one would expect, just naturally, that if things start to pick-up, nearly back to where it was, you’re going to get strong growth rate. That’s what happened last year,” said Cicman, an economist with CBoC.

In 2021, the real GDP growth in St. Catharines-Niagara reached 6 per cent — which Cicman credits to the strength of the second half of the year — almost offsetting the 6.1 decline in 2020.

And that has continued into this year. Despite communities still battling COVID-19, the lifting of public health restrictions and high vaccination numbers has enabled the region to grow. Cicman said each wave of the pandemic seems to be impacting the economy less and less, leading to optimism for the upcoming fall and winter seasons.

“There is a lot of pent-up demand for services or going out to places, restaurants, hotels, tourism — despite some of the virus still around, despite some of the costs increasing,” said Cicman. “So that’s really good.”

As part of the research, Cicman said they look at the output from each sector and historical data, including employment, housing, population, construction, immigration and upcoming projects. Every section is examined, in 11 major cities across Canada, to determine the board’s forecasts for economic growth.

For Niagara, tourism was a key element of the CBoC outlook. As those numbers continue to recover, the increasing focus on vehicle travel has also helped. While the price of gas has gone up, Cicman said people are taking in that cost but are still wanting to travel after two years of lockdowns.

“If this was an airport destination — and it still is, so the international travel from outside America will take awhile to recover — but the vehicle travel will help that,” he said. “The numbers have been pretty good so far. A lot of people travel within the province to Niagara, a lot of people from America to Niagara.”

And while the real estate market has slowed down from Niagara’s pandemic peak, with three months of decreasing sales, demand is high, with the region remaining a “desirable area.”

The pandemic impacted the region’s immigration, limiting the number of foreign students and migrant workers who are “important parts of the labour market,” but Cicman said he expects that to recover.

Manufacturing has continued to remain vital to the economy, with solid growth throughout 2021.

“They’ve recovered quite well and they’re still always employing lots of people,” said Cicman

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One short-term element the forecast considered was the Canada Summer Games taking place in Niagara and while it is not sustainable long-term, Cicman said it will play a part in getting people back to the region. It could also help locally, in encouraging residents to get out into the community and support local events.

But, at the same time, Cicman said there is always the potential that “maybe our recovery isn’t going to be as high as we may have put in the forecast,” whether that’s due to inflation or higher interest rates. He said, for example, both supply and labour could see a negative impact, despite additional demand.

“A lot of the people that were working before the pandemic, and there were signs of shortages already, haven’t all returned. So that put a bit of a damper on how much can actually grow,” said Cicman. “Even if there is demand, and they just don’t have enough staff to provide all the services, that will also affect them.”

There are pluses, minuses and caveats in all directions, which makes it challenging to forecast what will happen. But regardless, compared to where St. Catharines-Niagara was in 2020, Cicman said “it is recovering now,” and doing “quite well.”

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Cautious optimism as St. Catharines-Niagara economy looks to rebound - Niagara Falls Review
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