Normally, a reading of 65 suggests an economy that's basically operating close to its full potential. © Copyright 2020 The Globe and Mail Inc. All rights reserved. It already looks like the recession caused by COVID-19 will be one for the record books when it comes to joblessness. The 189-nation IMF is projecting the global economy overall will shrink by 3 per cent in 2020, rather than expand by 3.3 per cent as it predicted at the start of the year. A variety of newsletters you'll love, delivered straight to you. Read our. best day in more than 43 years on Tuesday, CBC's Journalistic Standards and Practices. “The length of the recession is key. Despite that rebound, the economy was expected to contract 5.7 per cent this year, the first annual contraction since the 2008-09 recession and easily the deepest since records began being kept in 1961. Alberta's economic decline will be the 'most severe' the province has ever seen: RBC. But that's only if the unprecedented steps being taken now do any good. "Brace yourself for some horrible data in the near-term, as there's little doubt that the second quarter will produce some painful and likely historic figures on ... economic contraction," the economics team at TD Bank said in a note to investors. "It's likely not until the April data is collected and released at the start of May that we will see the full picture of what happened in the second half of March.". In any given week, Canada gets about 45,000 claims for jobless benefits, according to the economics team at TD Bank. That was in line with BoC Governor Stephen Poloz’s recent statement that the economy would take “a couple of years” to make up lost ground once the pandemic is over. After the economy contracted sharply last month and lost a record 1.01 million jobs, economists have slashed back their economic forecasts because of lockdown measures and reeling oil prices, which hit a record low last week as global economic activity came to a halt. While the decline in March was record-setting, economists expect the data for April will show an even bigger drop, with the measures taken to slow the spread of the coronavirus in place for the entire month. We aim to create a safe and valuable space for discussion and debate. If they take an optimistic view and assume that's enough to contain the outbreak, even that short term pain will make a major dent in the country's total output, a metric known as the Gross Domestic Product, or GDP. Which means anyone willing to buy in when things look this gloomy could be getting in on the buying opportunity of a lifetime. The economy has largely shut down, paralyzed by measures to contain the coronavirus pandemic, free-falling financial markets, plunging oil prices and plummeting confidence,” said Tony Stillo, director of Canada economics at Oxford Economics. The BoC has already cut its key interest rate by a cumulative 150 basis points to 0.25 per cent in the past month and launched an asset purchase program, quantitative easing. The cure for the disease may be widespread shutdowns and social distancing efforts, but that underlines a fundamental paradox of the disease: the cure for the virus is precisely what makes the economy even sicker. That's lower than the 39 it hit in the depths of the 2009 financial crisis. But the numbers for March 16-22 came in at more than 20 times that, with 927,000 Canadians tossed out of work in a single week. That would cause the jobless rate to spike to more than 13 per cent. The Canadian Outlook Economic Forecast had these main highlights (Winter 2020 summary): real GDP to grow by 1.8% in 2020, and 1.9% the next year, slow global growth that will challenge our trade sector, the Bank of Canada likely won’t make any interest rate changes in 2020. Space available on storefronts in downtown Toronto, on April 16, 2020. By the "two quarters of economic decline" definition, Canada had a brief, slight recession in late 2014 and early 2015, as the price of oil crashed. Here's why knowing if we're in one matters, March jobs report showed more than a million jobs were lost in the month, economy contracted by nine per cent in the same month, CBC's Journalistic Standards and Practices. And the data suggests this one is on track to be quite a bit worse than that one. “Over all, due to the lasting damage of the disruption, we think GDP will remain below its late-2019 level until early 2022. The March jobs report showed more than a million jobs were lost in the month, while a preliminary estimate by Statistics Canada suggested the economy contracted by nine per cent in the same month. If the latest forecasts are realized, it would mark the deepest recession in at least six decades. Sign up today. Doug Porter at Bank of Montreal notes that numerous countries have been through economic shocks as bad as the Canadian economy's current one. We hopefully won’t get to the point where fiscal and monetary policy reach limits,” said Sébastien Lavoie, chief economist at Laurentian Bank. 351 King Street East, Suite 1600, Toronto, ON Canada, M5A 0N1. "This episode would fail the two-quarter test, even though it's obviously a recession," he said. Click here to subscribe. Economists are struggling to come up with best guesses as to what might be coming. Only five per cent are planning to expand, according to the CFIB's small business barometer. This translation has been automatically generated and has not been verified for accuracy. To encourage thoughtful and respectful conversations, first and last names will appear with each submission to CBC/Radio-Canada's online communities (except in children and youth-oriented communities). Non-subscribers can read and sort comments but will not be able to engage with them in any way. Canada is officially in a recession that's been caused by the COVID-19 pandemic, the C.D. Readers can also interact with The Globe on Facebook and Twitter . Closed Captioning and Described Video is available for many CBC shows offered on CBC Gem. Canada’s central bank is expected to come up with additional easing measures, according to 70 per cent of economists who answered a separate question, likely in the form of broadening its bond buying. Canada has officially entered a recession due to the economic devastation caused by the COVID-19 pandemic, the C.D. Asked about the shape of Canada’s economic recovery, more than 55 per cent of nine respondents said it would be a U-shaped recovery and one-third said it would be tick-shaped. "The council agreed the magnitude of the contraction makes it extremely unlikely that any future adjustments will overturn the conclusion of a major drop in economic activity in the first quarter," the council said. I'm a print subscriber, link to my account, Avoid the use of toxic and offensive language. Comments on this story are moderated according to our Submission Guidelines. Box 500 Station A Toronto, ON Canada, M5W 1E6. We reserve the right to close comments at any time. Full Disclaimer. In a January poll, they predicted 1.6-per-cent and 1.7-per-cent growth, respectively, showing just how abruptly the economy has turned. Some information in it may no longer be current. Add some “good” to your morning and evening. Please note that CBC does not endorse the opinions expressed in comments. "But very rapid rebounds from hard stops have and can be done.". By the time all is said and done, MacDonald thinks roughly two million Canadians will at least temporarily lose their jobs in the current panic. Prior to coming to the CBC, his work has appeared in the Globe & Mail, the Financial Post, the Toronto Star, Canadian Business Magazine and — believe it or not — Circuits Assembly Magazine. And they all emerged stronger on the other side. Box 500 Station A Toronto, ON Canada, M5W 1E6. Space available on storefronts in downtown Toronto, on April 16, 2020. Canada's hotel industry hammered by COVID-19, How to find out if your business qualifies for the COVID-19 wage subsidy, Politicians who consider sacrificing the old for the sake of the economy face a backlash: Don Pittis. That's far from booming — Canada's economy grew by 1.6 per cent last year, for example — but it's preferable to other alternatives. ", Pete Evans is the senior business writer for CBCNews.ca. But the picture they're painting for Canada's financial future is already bleak. Twitter: @p_evans Email: pete.evans@cbc.ca Secure PGP: https://secure.cbc.ca/public-key/Pete-Evans-pub.asc. “Will people want to return to busy restaurants or shops? It's official — Canada's economy is in a recession, C.D. In the April 23-28 Reuters poll of 25 economists, Canada’s economy was predicted to have contracted at an annualized rate of 9.8 per cent last quarter and to shrink 37.5 per cent this quarter. Stephen Gordon, an economics professor at Université Laval and member of the council, says the current economic slowdown is a great example of how the "two quarters of contraction" definition of a recession is too dogmatic. "The economic data will get precipitously worse over the next month but don't bother looking at that, it will only confirm what we already know," the money manager said. 1/. How bad will Canada's COVID-19 recession be? “Canada is in the midst of an historic economic contraction. And since a rebound in the summer is quite plausible, that would make the current recession only one-quarter long — deep though it may be. At least Canada's jobless rate was close to a record low before all this started. Audience Relations, CBC P.O. That means: Comments that violate our community guidelines will be removed. Even officials in Ottawa are willing to admit they're expecting a record-setting flood of job losses to hit home, and soon. If there's good news in these bleak numbers, it may be that the depth and breadth of the slowdown may be so sharp and sudden that it can't help but spur a big rebound. Under a more pessimistic scenario, the board sees lockdowns and quarantines stretching for up to six months, until August. Howe Institute's Business Cycle Council declared Friday. Economists tend to focus on GDP in their modelling, but when you ask Canadian workers how they think the economy is doing, they tend to focus on whether they have jobs that pay the bills. Closed Captioning and Described Video is available for many CBC shows offered on CBC Gem. The Zero Canada Project provides resources to help you manage your health, your finances and your family life as Canada reopens. The Canadian Federation Of Independent Business says its monthly measure of small business confidence fell to the lowest level in its 32-year history this week. David MacDonald, an economist with Ottawa think-tank the Canadian Centre for Policy Alternatives, said those numbers are likely just the start. Stock markets tend to peak before recessions start but they also tend to bottom before they end, Manulife Investment Management said in a note to clients on Thursday. And stock market investors are tentatively showing signs of believing that could be the case. "All different conditions, true," Porter said. Audio for this article is not available at this time. It is a priority for CBC to create a website that is accessible to all Canadians including people with visual, hearing, motor and cognitive challenges. Audience Relations, CBC P.O. But the Business Cycle Council still says that slowdown didn't meet the bar as an official recession by their metrics.
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