Greetings from the Ghost of Christmas Past!
It is mid-December as I write an “economic outlook for the year” article for this early 2025 edition of Business Voice.
By the time you read this, Donald Trump will be back in the White House, and you will know whether he has indeed carried through on his threatened inauguration day imposition of a 25% tariff on all Canadian products entering the United States. The latest annual population estimates for Halifax will be available and you will have a better sense of the impact that changes in federal immigration policy have had on our population growth. You may already be in the midst of a Canadian federal election with a clearer sense of each party’s policy proposals and a more confident prediction as to who will form the next government.
I have lost count of the number of analyses that have been published in the past few weeks by financial institutions, think-tank, and academic economists on the estimated impact of the Trump tariffs, all of which deride tariffs generally and predict negative consequences for the Canadian economy.
Among Canadian provinces, first-order effects could be less severe in Nova Scotia as our share of GDP composed of exports to the United States is among the lowest. What happens, though … to lobster exports through Halifax Stanfield International Airport and container traffic through the Port of Halifax, for example … if the price of Canada’s relief from American tariffs is a requirement to become a more active participant in a tariff war with China? More broadly, but not unique to Halifax or Nova Scotia, how will we fare if these geopolitical developments lead to a resurgence of inflation and a rebound of interest rates in response?
A possible inflection point in our population growth curve presents a double-edged sword. While future demographic realities mean that we will continue to need newcomers to support our economy as entrepreneurs, business owners, skilled labour, and taxpayers, a temporary slowdown will ease pressures on stressed housing markets, transportation networks, and health care systems. Some employers and our post-secondary institutions, however, face serious financial repercussions as their flows of workers and students are reduced.
And how will the impending federal election impact our economic outlook? Central to this answer is the degree to which the next Parliament understands and addresses our poor comparative performance and recent downward trends in productivity and standard of living.
Big challenges require bold action and changes to major drivers of productivity like taxation, regulation, competition, and trade policies are often controversial and become highly politicized. Can we summon another “Ivany moment” to forge consensus on those necessary bold actions, just as Nova Scotians from all walks of life took up the common cause of addressing looming demographic decline a decade ago?
By now you will have realized that this “outlook” contains more questions than answers. Rather than being a Keynesian, a Marxist, or a Friedmanite, I subscribe to the Yogi Berra school of economics, “It is difficult to make predictions, especially about the future.” Cliché as it may sound, the one certainty for 2025 would appear to be uncertainty. (In fact, this will likely hold true until January 2029. Sigh.)
This uncertainty brings with it substantial risks and some serious potential consequences.
Opportunity is before us as well, though. There are choices within our grasp to mitigate and offset these risks and propel us to greater prosperity.
As a final question: can we collectively summon the resolve to take the path of bold action? As a final answer: I believe we can.
Please join us this spring as we kick off conversations focused on various aspects of our productivity challenge and how we can build consensus towards addressing them.
Let’s get to it!
Learn more about the Halifax Partnership at:
halifaxpartnership.com
Cover Image Credit: Acorn Art and Photography