Canada is in the midst of an economic crisis unlike anything that most of us alive today have ever experienced. Our updated forecast has real GDP contracting at an annualized pace of almost
5 per cent in the first quarter of this year. In the second quarter, the decline will hit 25 per cent.
To put this in perspective, until now, the largest hit to GDP in the past 60 years was the 8.7 per cent contraction in the first quarter of 2009.
Key findings
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National focus
Canada
Canada
Newfoundland and Labrador
Newfoundland and Labrador
Prince Edward Island
Prince Edward Island
Nova Scotia
Nova Scotia
New Brunswick
New Brunswick
Quebec
Quebec
Ontario
Ontario
Manitoba
Manitoba
Saskatchewan
Saskatchewan
Alberta
Alberta
British Columbia
British Columbia
Yukon
Yukon
Metropolitan focus
Halifax
Halifax
Québec City
Québec City
Montréal
Montréal
Ottawa
Ottawa
Toronto
Toronto
St. Catharines—Niagara
St. Catharines—Niagara
Winnipeg
Winnipeg
Calgary
Calgary
Edmonton
Edmonton
Vancouver
Vancouver
The main factors behind this unprecedented economic situation are the measures implemented to slow the rapid spread of COVID-19. Physical distancing requirements as well as the closure of non-essential businesses have brought a large portion of the economy to a standstill.
The Canadian economy is also dealing with rapidly deteriorating conditions in our energy sector. A price war between Saudi Arabia and Russia sent the price of crude oil plunging at the beginning of March. Governments across the globe are now asking their citizens to stay home and industrial production is falling, creating a steep drop in energy demand. As a result, production and investment in Canada’s energy sector will be hit very hard this year.
We are already beginning to see the fallout from this rapid halt to economic activity in the job market. Our analysis suggests that, at its peak, 2.8 million Canadians will lose their jobs.
Thankfully, the labour recovery is expected to be quick once restrictions begin to ease with people being added back onto payrolls before the second half of the year. Despite this strong rebound, the unemployment rate will still shoot up to average 14.4 per cent in the second quarter.
One of the reasons we foresee the job market and economy being able to bounce back quickly is the extraordinary response we’ve seen from governments to help businesses and consumers stay afloat while economic activity is being restricted. These measures of course carry a financial cost, with the federal deficit anticipated to balloon to around $125 billion in fiscal 2020–21.
Even assuming that physical distancing measures are slowly relaxed over the spring and summer, the effects of the pandemic on the economy will likely endure until a vaccine is available. Given this assumption, real GDP is forecast to contract by 4.3 per cent in 2020, followed by a solid 6.0 per cent rebound in 2021.
Canadian real GDP
(real GDP, expenditure-based, 2012 $, percentage change)
e = estimate
f = forecast
Sources: The Conference Board of Canada; Statistics Canada.
Canada, economic forecast
(forecast completed April 1, 2020)
Italics indicate percentage change.
For each indicator, the first line is the level and the second line is the percentage change from the previous period.
Sources: The Conference Board of Canada; Statistics Canada; CMHC Housing Time Series Database.
Real GDP
expenditure-based
2020
2021
2022
2023
2024
2,002,375
2,123,466
2,176,057
2,213,285
2,254,698
–4.3
6.0
2.5
1.7
1.9
Employment
(000s)
18,529
19,101
19,750
19,326
19,539
–2.7
3.1
1.2
1.1
1.1
Housing starts
(units)
199,427
225,958
209,342
202,946
196,588
–4.4
13.3
–7.4
–3.1
–3.1
Unemployment rate (per cent)
8.8
6.6
6.4
6.2
6.1
(2012 $ millions)
Canadian overview
Assumptions
Canadian
overview
May 12, 2020
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