Canada’s Recovery from Covid-19

Along with whole world, Canada’s economy has suffered from the COVID-19 pandemic and other events in 2020, notably the shock to global oil markets. How badly? An examination of the immediate data and longer trends indicates significant damage, with a lengthy recovery period ahead.

Let’s start with labor markets, where there are signs of recovery but also growing evidence of damage. The unemployment rate exploded to nearly 14 per cent from 6 per cent during the shutdown from March to May. The rate has dropped steadily since as many displaced workers have been re-engaged, but the second pandemic wave and renewed shutdowns in many provinces have meant more job losses. Employment fell by 63,000 in December, and the unemployment rate rose slightly to 8.6 per cent.

There are many other worrying signs. Long-term unemployment – lasting 27 weeks or longer – has increased sharply and now represents more than one-quarter of those unemployed, with a growing risk of many discouraged workers dropping out of the work force.

Much of the Canadian work force is underutilized. The most recent Statscan data show that one in six people in the potential labor force are employed but working less than half of their usual hours, unemployed or want a job but are not looking for one.

Economic output has been steadily rebuilding after the deep contraction during the first shutdown period. The consensus among private forecasters is that GDP shrank by 5.8 per cent in 2020, with real growth of 4.8 per cent projected for 2021.

Despite this rebound, the survival of many businesses remains under threat. Even with a successful vaccine rollout and a steady return to more normal operating conditions in many sectors, Canadian GDP by the end of 2021 is projected to be about 3 per cent below GDP at the end of 2019.

Recovery Plan & Progress

Canada’s 2021 economic outlook is similar to that of other developed countries: After the largest economic contraction since 1945 (a dip we estimate at 5.5% of GDP), the economy should grow sufficiently to largely offset the losses of 2020

As of early 2021, many regions in Canada are experiencing increased restrictions as they work to try quell their second wave of infections. However, optimism is on the horizon with Canada’s historic vaccination campaign underway.

Recent medical developments are encouraging: Widespread distribution of a vaccine starting in the summer of 2021 could enable the Canadian economy to grow by 4.5% or more. A later deployment would limit gains to 4%. In any case, recovery to pre-pandemic activity levels will have to wait until 2022.

Canada has implemented extensive travel restrictions to help slow the spread of COVID-19. Please note that if you enter Canada from any other country, you must self-isolate for 14 days.

In conclusion, the growth of the Canadian economy will depend first and foremost on managing the pandemic.

If mass distribution of a vaccine begins mid-year, we could see economic growth of 4.5% or more and a return to our pre-crisis GDP fairly early in 2022.

If a vaccine is not distributed until late 2021, growth would be limited to about 4%, and full recovery of the Canadian economy would then be delayed until late 2022.

Amidst the above situations, Canada’s immigration plan for 2021 is also expected to boost the growth of the Country.

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