Economy forecast to rebound in 2021

Hey there, time traveller!
This article was published 27/05/2020 (2116 days ago), so information in it may no longer be current.

The subtitle of a new economic outlook report put out by the Conference Board of Canada this week says it all: “No province spared from recession.”

It’s an unsurprising conclusion, given the fact that COVID-19 has put the country into what the Conference Board calls the worst economic downturn in decades, with industries and trade grinding to a near-standstill and record numbers of Canadians experiencing unemployment.

The report forecasts that the national real GDP will experience a percentage change of 4.3 per cent, while Manitoba will experience a 4.5 per cent change. The Prairie provinces are expected to experience the largest dropoff in GDP, with Saskatchewan’s and Alberta’s anticipated to decline by just over six to nearly seven per cent respectively.

In March, the Conference Board notes, the economy contracted by nine per cent, and the organization estimates the country’s real GDP will fall by 25 per cent in the second quarter before the precipitous drop begins to even out as the year continues.

“From a historical perspective, this is an off-the-charts decline, with the drop nearly three times worse than any other in modern statistics that date back to 1961,” the report says.

However, the short-term losses are expected by the Conference Board to rebound strongly as the labour market adjusts and government income supports begin to take lasting effect. If demand for goods and services increases, the rebound could occur as early as the third quarter, when the Conference Board anticipates positive growth.

By next year, it’s forecast that the national GDP will grow by six per cent, which will eventually fall back to pre-pandemic figures. However, the report notes, the hardships will have lasting effects which the country and its provinces are only now starting to grasp; recovery is dependant on demand returning to normal levels.

In Manitoba, the financial effects of COVID-19 were compounded by events that preceded the pandemic’s arrival, the report notes: this winter’s nationwide demonstrations in opposition to pipeline construction on Wet’suwet’en territory in B.C. affected Manitoba’s transportation manufacturing and warehousing sector; and trade issues with China led to a greater than 40 per cent decrease in canola exports.

Those challenges, combined with COVID-19, shook up the province’s economy, and the Conference Board predicts that with a growing demand for government services, particularly health care, “the province’s rainy-day fund could soon be exhausted.”

Still, Manitoba figures to have one of the strongest rebounds in 2021 among all provinces according to the report’s projections. British Columbia’s real GDP is expected to grow by seven per cent, while the Prairie provinces are right behind in the six per cent range.

ben.waldman@freepress.mb.ca