Canada won’t return to pre-pandemic employment for another five years, conference board warns
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While the board’s forecast of a 6.6 per cent decline in 2020 gross domestic product is better than its earlier prediction of an 8.2 per cent drop and the board says a recovery is underway helped by government aid programs, the outlook is dire for some industries. Closures and declines in household spending will restrain the recovery’s pace into mid-2021, board chief economist Pedro Antunes said. Pre-pandemic unemployment levels won’t return until 2025, he said.
“Air transportation is nearly shut down,” Antunes said in the report. “Accommodation, food and beverage services, textiles manufacturing, printing, motion picture, and sound recording are other examples of industries that remain hard hit and face a tumultuous business environment for the foreseeable future.”
With central banks in Canada and the U.S. slashing benchmark interest rates earlier this year to help the economy, and the expected need for low rates during a slow recovery, the board said it doesn’t expect any changes in interest rates until at least 2023. Canada’s benchmark rate is 0.5 per cent; many five-year fixed mortgages can be obtained for less than 2 per cent.
While the board doesn’t foresee more rounds of wholesale lockdowns because of the pandemic, it did express concerns about the control of the virus in the U.S. and Washington’s ability to agree on renewed aid to generate spending in Canada’s most important export market.
“The U.S. recovery depends on Congress and the president agreeing to additional stimulus measures to keep the economy on,” Antunes said. “Canadian exports to the U.S. have rebounded, but continued progress is tied to U.S. household spending.”
