“It’s been 13 crazy months for me,” he says. “You can imagine the struggle. Our gross revenues are down 97%. His company, Ottawa Special Events – which rents stages, tables, sound and lighting equipment – has suffered several order cancellations and had to lay off its 23 employees.
“We’re not able to bring anyone back, and my business partner and I haven’t drawn a paycheck since April 2020,” he adds. The government’s financial support barely covers his mortgage, and even when orders come back he will face deferred rent payments for his business. “There is a lot of desperation. I just asked two friends to declare bankruptcy. “
Yet after a slow start in the deployment of Covid-19 vaccines, the outlook is starting to improve and the economy has proven to be surprisingly robust.
In April, in the country’s first budget for two years, Finance Minister Chrystia Freeland was able to announce funding for what observers have dubbed the “three Cs”: climate, Covid and child care.
It has extended its support to individuals and businesses most affected by the pandemic, while introducing new social policies covering childcare and support for early childhood education, as well as measures to accelerate the transition to childcare. green economy.
That same month, the Bank of Canada said the economy had shown “impressive resilience”. It has raised its GDP growth forecast to 6.5% for 2021 and 3.75% for 2022. In addition, the central bank has taken a step ahead of its international peers by saying it will reduce easing. quantitative. He also raised the prospect of an interest rate hike.
Against this background, Craig Wright, chief economist at the Royal Bank of Canada, says there is optimism about a consumer-led resurgence, supported by an estimate of C $ 200 billion (C $ 163 billion). dollars) that people have hidden in savings – including C $ 117 billion. government payments. Relatively strong corporate balance sheets could also fuel investments and acquisitions, Wright says.
In part, the Canadian growth outlook reflects global trends, particularly in the United States. The election of President Joe Biden and the effect of his $ 1.9 billion stimulus package also helped spur Canada’s intertwined recovery.
“We can expect a more predictable business environment with the new administration and a more multilateral focus,” says Wright. “Canada is a small open economy with limited weight, and we do well in a multilateral and open world. the [Biden stimulus] is good news for US growth. Good news for the United States is good news for Canada. “
He finds that growing demand from the United States is helping Canadian industry, especially in the automotive sector, as supply chains span both countries. Longer term, he expects gains as the United States seeks to diversify from China and move towards “a cleaner, greener and smarter economy.” In a recent article, Wright highlighted the opportunities for export-led growth if Canada can realize its potential. The opportunities, he said, lie in carbon capture and electric vehicles, the US focus on reengineering supply chains and relocating manufacturing “to meet the challenges of national security, resilience, pandemic recovery and climate change ”.
Others, however, urge caution. Biden’s call to “buy American” and his cancellation of the Keystone XL pipeline will put further pressure on the Canadian economy. At the same time, low interest rates, the limited supply of housing and working from home have fueled a surge in house prices. This raised concerns about a bubble and made it harder for young Canadians to climb the housing ladder.
Canada also faces an issue related to an aging workforce, which it is trying to tackle with a three-year program to attract 1.2 million immigrants.
Robert Asselin, Senior Vice President of Policy at the Business Council of Canada, says: “The economy has proven to be more resilient than most people thought six months ago. Unfortunately, growth is not driven by productive investment but by consumption. “
He argues that the budget has been primarily redistributive with an emphasis on social spending. Instead, he would like to see a more “sectoral and surgical” focus on areas with the greatest potential for investment and growth, such as advanced manufacturing, clean technologies and biosciences.
Asselin identifies a broader need to foster innovation and growth to overcome a preponderance of small and medium enterprises that lack scale. “The government is not focusing enough on long-term growth policies,” he says. “The pandemic has been difficult to manage, but this budget was supposed to be about how to build back better. I think they missed this opportunity to be more productive. “
Another challenge for Canada will be political – both to what extent the federal government can implement its plans and how long it can stay in power as a minority government.
Anna Gainey, Executive Chair of Canada 2020, a progressive think tank with ties to the ruling Liberal Party, said: “The commitment is clear. We are now starting to work province by province and understand regional realities and between urban and rural areas. It will take time to find a solution across the country. “
Wood is cautiously optimistic about the recovery of Canada and his business. “People know there will be pent-up demand,” he said. “I hope that from September we will see things come back. We are still a long way off, but there is hope. The world needs to recover and get back to a normal life. “