Effects of coronavirus on Canadian macroeconomy
A survey done by Deloitte, a global consultancy in macro economics and finance auditing company, revealed that the combination of global covid-19 pandemic and severe oil shock has driven the economy of Canada into recession. It has been difficult for foresters to assess the degree of economic decline because it is not clear when the containment will be lifted or time when the vaccine will be available. Policymakers appear to have put the economy on hold awaiting recession of the virus. Many business are shut down temporarily and some might never reopen. In addition, there is a significant drop in the prices of oil which is the highest contributor to the Gross Domestic Perc pita (GDP). At the time when the findings of the survey were put together, the economy had shrined to an average of 3.8% of the annual revenue.
The economic indicators have shown that the decline would push to a further 5% with the second quarter registering a downward trend of 23% at the close, which is twice worse than the worst quarter in 2008-09. Everything at that point remains an estimate but the contraction will be substantial. The case will remain the constant until the expected rebounding anticipated to be in the middle of the third quarter. There is an estimate that the economy will grow with a double-digit in the fourth quarter. The economy is anticipated to recover in 2021 but the pace will be dependent on the legacies of reopening this year.
Canadian economy has been on the downward trend of growth with three last months of 2019 registering 0.3% annual gain. However, things are looking pretty well for the economy since the United States and China have reached an agreement to stop the tariff war, which jeopardized global economies. Moreover the United Kingdom had negotiated and was successful in legislating the term of exit from the European Union. Deloitte forested that the global and Canadian economy would improve in 2020.
A change came in January with the outbreak of covid-19 in china. The virus could not be contained hence it came with travel restrictions that hampered the economic growth. Even the supply chain from chain was disrupted. The rails too blocked in Canada which was expected to have a toll in the GDP since it was a significant form of transport. When the virus reached Canada containment measures were introduced, which scaled to lockdown. Nonessential businesses were closed and lockdown on activity was imposed. The pandemic impacted financial markets, triggering down-trend in equity prices and commodity prices. The crude oil prices also dropped from $60 to 45$ per barrel which was largely contributed to by viral spread and dominance of oil cartels. It further dropped to $20 and in the recent past it neared $5 a barrel. This lead to high inflation. This was so because it seemed like the whole sectors of the economy were at a standstill. Employment was greatly affected, therefore, the federal government expanded access to the Employment Insurance (EI) which was an eligible program for unemployed workers. It announced that 75% of the pending unpaid wages would be implemented from April.
In conclusion Canadian macro economy has seriously shaken in 2020 with little growth in GDP, high inflation due to lockdown, and global fall in oil prices. Employments have been lost and it has forced the government to introduce stimulus packages to encounter the aftermaths. It is now the responsibility of the policymakers to enact laws that will enable the economy to revamp once again.
Reference
https://www2.deloitte.com/us/en/insights/economy/americas/canada-economic-outlook.html