OTTAWA – Canada may have already begun to recover from the deepest recession on record, assuming the country can avoid another national COVID-related shutdown, a private sector forecast said Monday.
The Conference Board of Canada report estimates the economy will shrink 8.2 per cent this year, then return to growth with a 6.7-per-cent rise in 2021 and 4.8-per-cent in 2022 – provided there are no more national shutdowns.
The outlook is at the optimistic range of the Bank of Canada’s most recent estimates, but is based on 1,200 variables and the expertise of its analytical team, said Alicia Macdonald, associate director of economic forecasting for the Conference Board.
Macdonald also warned that there won’t be a sharp “V” recovery but said a gradual “U” recovery is likely.
Meanwhile, Bank of Canada governor Tiff Macklem said in a webcast speech Monday that the bank expects economic growth will resume in the third quarter. Even so, it also warned the recovery period “will likely be prolonged and bumpy, with the potential for setbacks along the way.”
The Conference Board cautions that its forecast depends on “the country’s ability to avoid a second severe outbreak of the COVID-19 virus” that would require another national shutdown. It expects many companies can weather the storm of additional outbreaks, however.
“I think we’ve learned a lot of lessons from our experience from the first lockdown,” Macdonald said in an interview.
Businesses have more techniques and tools – such as plastic barriers to separate customers from staff – and more guidelines from governments in how to operate safely, she said.
“So we think that, should a second wave come in the fall, they’ll be better prepared to handle it this time around.”
The Conference Board projects the unemployment rate will peak at 13.7 per cent in the second quarter ending June 30, the highest since comparable data was first recorded in 1976.
But the report says the addition of nearly 300,000 jobs in May and continued easing of restrictions in June probably indicate the pandemic’s worst impact on the labour market has passed.
It’s projecting the addition of another 1.3 million jobs in the July to September quarter, dropping the national unemployment rate to 10.5 per cent.
The Conference Board says that if the country can avoid a second national shutdown, Canada’s economy could grow by 6.7 per cent in 2021 and by 4.8 per cent in 2022.
– By David Paddon in Toronto with a file from Jordan Press in Ottawa.