Canada’s Economy – Emergency Funding
Shenfeld suggested the current approach to lockdowns favoured by provinces, which is to implement limited restrictions for a set period of time, may not cut it.
“We shouldn’t set a deadline for reopening based on time, we should have a picture of the (level of) background cases in the community that we’ll need to reopen,” he said.
And that means governments will have to keep the emergency funding going ― not just to laid-off workers but to businesses that are facing a very hard winter ahead.
Beyond the rent subsidy for businesses that the federal government has launched, Shenfeld suggested targeted help for specific industries that are suffering and pushed for more aggressive solutions.
“Perhaps take-out meals and alcohol to-go at bars should be sales tax-free? We’ll need to think creatively if it takes longer than a month to unlock this lockdown.”
Canada’s Economy Forcast (Reference)
The economy seems to have recovered noticeably in Q3, after GDP shrank at a record pace in Q2 due to the health crisis. In August, the unemployment rate hit a five-month low, with total employment at just 5.7% below its February level. Furthermore, retail sales continued to expand in July and a flash estimate pointed to another gain in August, hinting at stronger private consumption in Q3. Moreover, both housing sales and prices jumped in August, while housing starts surged to a near 13-year high in the same month, which should have supported residential investment in Q3. However, crude oil shipments by rail were at an eight-year low in July, pointing to a depressed energy sector. In other news, the minority Liberal government announced plans to extend the wage subsidy program—which ends on 21 November—until the middle of next year, although the measure must still secure a majority in Parliament.
The economy is seen contracting steeply this year, as lower oil output and Covid-19 restrictions weigh on economic activity. Next year, GDP should rebound robustly as strong fiscal and monetary stimulus support domestic demand. Future developments in commodity prices pose a significant risk to the outlook. Analysts project a contraction of 6.4% in 2020, before the growth of 5.0% in 2021, which is unchanged from last month’s forecast.