Governments across the country are spending unprecedented amounts in response to the pandemic, but they're only making up a fraction of the damage COVID-19 is doing to the Canadian economy.
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If existing shutdowns remain in place through the spring and are gradually lifted over the rest of 2020 while oil prices remain low, Giroux estimates that Canada's real GDP will
fall by 12 per cent this year – nearly four times the steepest drop on record. That includes an estimated drop of a little more than $500 billion in the second quarter alone before a slow recovery period begins.
"We're nowhere near back, even by the end of this year, where we were in the first quarter of 2020. It'll take us two years even just to get back to those levels of nominal GDP," Kevin Page, a former parliamentary budget officer, told CTVNews.ca via telephone Thursday from Ottawa.
"That's just an unbelievable adjustment. We've not seen anything like that before."
The COVID-19 outbreak and ensuing disruptions will likely lead to a recession. Uncertainty will remain until there is clarity over when containment can be relaxed.
www2.deloitte.com
The outlook
The policy response cannot stop the economic pain. Our base case forecast is for a recession, with a 4–5 percent contraction in 2020. Were it not for the policy stimulus, the decline would be dramatically larger.
There is, regrettably, still enormous uncertainty. When will containment efforts prove successful? When containment is lifted, work is unlikely to return to normal, but what will the new normal be? There are worries that we could have waves of infection. In other words, containment could be lifted and then reimposed for a time. Given the magnitude of the initial contraction in the economy, it is highly likely that any relaxation of containment will cause a rebound in growth. But after that initial jump, the pace of growth is likely to be slow as economies deal with the legacies from the deep recession. It
also seems highly likely that the future will be characterized by considerable volatility in both economic and financial conditions.
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) so at least they are not giving any false impressions. How much will be COVID related and how much Brexit related? And how much of the Brexit related will be put on COVID? Who knows. Who would even be able to work that out?
