Railway work stoppage to weigh on GDP, put pressure on inflation: economists

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Railway work stoppage to weigh on GDP, put pressure on inflation: economists
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Economists say the work stoppage that began last night at Canada’s two major railways will have a significant effect on the country’s economy.

Dennis Darby, president and CEO of Canadian Manufacturers & Exporters, joins BNN Bloomberg to discuss the potential economic impact of a possible rail stoppage.

“If it persists, the lockout would temporarily derail activity not just within that sector but within the economy more broadly, given how important the rail network is for exports and goods shipments,” wrote CIBC senior economist Andrew Grantham in a note. The direct impact on the economy is actually relatively small, noted Grantham — it’s the knock-on effects of a shutdown that really have the potential to bite. A longer stoppage could lead to some goods production shutting down, and would limit retailers’ ability to stock some goods on their shelves.

BMO economists Robert Kavcic and Shelly Kaushik wrote in a note that, historically, these kinds of disruptions have ended relatively quickly through back-to-work legislation, but the economic impact mounts with each passing day.

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