Report: COVID-19 will have long-lasting effects on Canadian economy

Mar 25, 2020 | 10:35 AM

LETHBRIDGE, AB – A new report from the Conference Board of Canada predicts that the COVID-19 impact will impact the county’s economy for years to come.

“In comparison with our baseline scenario, the bigger negative impact on the Canadian economy is the result of lower energy and resource investment, weaker exports, and a drastic decline in household spending.”

For this scenario, they assume that the travel bans and social distancing measures already in place in Canada and the United States will stay in effect until the end of August and that the oil price war between Saudi Arabia and Russia does not get resolved right away.

“The result is a much deeper and longer-lasting hit to economic activity in Canada.”

Although the Conference Board had previously forecast real GDP growth of 0.3 per cent this year, they now say it could contract by 1.1 per cent in 2020.

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Over 330,000 jobs will be lost over the second and third quarters, leading to the unemployment rate rising to 7.7 per cent. Stats Canada has been reporting unemployment nationally to be anywhere from 5.5 per cent to six per cent in recent months.

The U.S. economy would contract by around one per cent.

“With diminished demand from our most important trading partner, Canada’s exports of goods and services are forecast to decline in real terms by 2.2 per cent in 2020.”

Oil prices will remain low and investment into Canada’s fossil fuel sector will continue to fall.

“In the coming years, Canada and many other countries will need to deal with the economic fallout of COVID-19, which will likely leave households, governments, and businesses deeper in debt than they were prior to the crisis”

Financial aid packages from the federal government and the Government of Alberta are likely to help many individuals and businesses avoid bankruptcy, thus reducing long-term financial hardships.

The full report from the Conference Board of Canada can be accessed here.

by David Opinko