Bank of Canada Predicts Slow, Uneven Economic Recovery

The coronavirus pandemic brought about significant changes to Canada’s economy, causing many Canadians to change their behaviour in terms of consumption. As a result, the Bank of Canada (BOC) is anticipating the country’s recovery to take place in two stages, as Canadians gradually begin to revert to pre-pandemic output.

According to Deputy Governor Lawrence Schembri, strict stay-at-home orders and the shutdown of non-essential businesses and services has caused consumers to change their behaviour as a means of adapting to a stark new reality. Many Canadians had lost their jobs during the pandemic, and became reliant on government financial aid as a means of income; as a result, they began buying less and opted out of non-essential consumption.

Although some restrictions are being lifted and people are beginning to return to work, the sudden change in consumer behaviour continues to dominate. Canadians have been purchasing more essential goods such as food, personal care products, and cleaning supplies, while reducing their consumption of non-essential goods and services such as clothing, cars, entertainment, dining, and travel. Online sales however, have been the predominant mode of retail shopping, and have increased 40% compared to the previous year.

In the meantime, the BOC is anticipating Canada’s economy to adapt to two stages of recovery, with the first phase reflecting a sudden economic uptake, followed by the second phase which will most likely reflect sporadic growth alongside some degree of uncertainty.

In the first stage, the gradual reopening of the economy will cause unemployment levels to decrease, and spending to increase. Some of the purchases that Canadians were putting off during the pandemic such as clothing, cars, and personal care services will be on rise. However, consumers will not be as reluctant to take on debt as before the pandemic, most likely because their level of income has changed.

According to the BOC, the second stage will be subject to some degree of uncertainty, given that the outcome of the virus is still unclear. The pandemic has caused many sectors of the economy to contract, causing the recovery in job growth to be sporadic. The sectors that are dominant in energy production will have a slow recovery, meanwhile the sectors that were hardest-hit such as retail stores and restaurants are expected to bounce back rather quickly. On the other hand, areas such as sporting events, travel, and in-restaurant dining will not be able to recover as quickly as hoped due to the lingering effects of the pandemic.

Information for this briefing was found via Bank of Canada. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

Video Articles

Fortune Bay: The Potential Billion Dollar Project

Japan Gold Enters New Chapter as Barrick Alliance Concludes – John Proust

Barrick Mining’s “Company Defining [Gold] Discovery”

Recommended

ESGold Secures $9 Million In Non-Dilutive Funding From Ocean Partners

Altamira Gold Encounters Porphyritic Intrusive Rocks In Initial Scout Drilling At Regional Targets

Related News

Bank of Canada Maintains Pace of Bond Purchases, Near-Zero Interest Rates

The Bank of Canada has decided to keep its current pace of asset purchases, as...

Thursday, September 9, 2021, 02:39:00 PM

Deloitte Report Suggests Canada Needs to Increase Workforce In Order to Meet Desired Economic Growth

Canada’s economy was beginning to succumb to an economic contraction despite the difficulties posed by...

Wednesday, September 30, 2020, 10:24:45 AM

Bank of Canada Hikes Rates 50 Basis-Points, Warns of Further Increases

As a surprise to markets, the Bank of Canada delivered a slightly smaller rate hike,...

Wednesday, October 26, 2022, 10:39:50 AM

Event Horizon: Bond ETFs on the Edge of the COVID Credit Crunch

Y’all want to see a chart? This one looks like a chart of the output...

Friday, March 27, 2020, 08:34:56 AM

Bank of Canada Stays Put on Interest Rates Despite Surging Inflation

Despite surging inflation for just about anything and everything, an out of control housing market,...

Wednesday, January 26, 2022, 02:47:00 PM