The Canadian economy is facing a long, slow recovery from COVID-19, and some industries are never returning to where they were, according to a new forecast from a business think-tank.
The prediction, from the Conference Board of Canada, indicates that things will not return to normal until there is a vaccine to fight COVID-19, likely next June.
“Until we see COVID completely behind us, it will be a tough race. We will not see a full recovery until there is a vaccine and it is brought under control. The greatest risk is if a vaccine is ultimately not found, ”Pedro Antunes, chief economist of the Conference Board, said in an interview.
The Conference Board’s argument was bolstered by a Statistics Canada report on Wednesday showing the size of the Canadian economy is still six percent smaller than in February and only a quarter of industries are at their pre-size. the pandemic.
Statistics Canada showed that Canada’s gross domestic product rose 3% in July, after increasing 6.5% in June. The StatsCan report also says data should show the economy grew only 1% in August.
As the economy started to rebound in May and June as COVID-related restrictions eased, the start of the second wave is creating more problems, Antunes said.
“We used to try to flatten the curve for new COVID cases. Now it’s a recovery-flattening COVID case, ”Antunes said.
Consumer spending picked up as restrictions began to loosen, Antunes said, in part because of pent-up demand, and in part because of government support programs, including the Canadian Emergency Response Benefit. and the Canadian emergency wage subsidy.
“These are consumers to the rescue with a lot of money borrowed by the government,” said Antunes, who predicted that SCAR would ultimately be extended until next June.
Some sectors will have more difficulty than others as the second wave continues, Antunes said, highlighting the hospitality, travel and culture industries.
Other industries are experiencing disruptions that are likely to be permanent, he added. Among the sectors hardest hit in the long run, Antunes predicted, will be physical retailers and commercial real estate, especially office buildings. Simply put, businesses are realizing that having employees who work from home works very well.
“I think telecommuting will become permanent in many cases. And that also means there will be a lot of office space in the market, ”Antunes said.
For retailers, a gradual shift to e-commerce has turned into a tidal wave because of COVID-19, and many customers will not return once COVID is over.
“I think a lot of these changes are permanent. We have seen a greater increase in e-commerce in a few months than in six years, ”Antunes said.
This assessment is supported by Retail Analyst Lisa Hutcheson.
“The longer people shop online, the less likely they are to go back,” said Hutcheson, managing director of retail consulting firm JC Williams Group.
The rapid rise of e-commerce, which Hutcheson said amounted to a decade of increases, has already led to the complete bankruptcy of some companies.
“The retailers that weren’t making these changes are likely the ones that went out of business,” Hutcheson said.
In a recent survey, JC Williams Group found that 39% of Canadians say they will stick with their current buying habits even once an effective treatment for COVID-19 is found, Hutcheson said.
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