06 May 2020  /  by: Bryan Yu, Deputy Chief Economist   /  2 minutes

Better days ahead, despite COVID-19 economic woes

Like the majority of my Central 1 colleagues (and workforces right across the globe), I’ve spent the past eight weeks becoming accustomed to the ‘new normal’ brought about by the COVID-19 pandemic. 

As I work from home, conduct media interviews from my living room with Moana playing in the background and prepare breakfast for my daughters while ruminating on this recession which is like no other, I remain hopeful for better days ahead. 

The global COVID-19 pandemic has upended our daily lives as we make drastic changes to our lifestyle to collectively address and mitigate the health crisis. New phrases such as ‘physical distancing’ and ‘flatten the curve’ have entered our vocabularies and are likely to stay for good. Forget athletes – now Public Health Officers, front-line medical workers, grocers, delivery workers and retail staff have emerged as our new heroes. 

Whilst I navigate significant change in my daily lifeI am conscious of the people behind thstatistics and the fact that the impact of COVID-19 is much more serious for those whose economic livelihoods have been threatened. Millions across the country have lost their jobs or had hours severely cut.  

Service workers have been hardest hit by the containment measures which have resulted in reduced demand for non-essential retail products and restaurants closing dine-in services. These losses have been particularly concentrated among females and the young, leading to another new COVID-phrase: she-cession. 

The deep freeze, while temporary, will lead to a sharp contraction in economic activity. Central 1’s latest B.C. Economic Forecast Update outlines the “unfathomable” impact COVID-19 is having on Canada’s economy and includes various Canada-wide and B.C.-specific recovery projections. We forecast provincial GDP to contract 7.3 per cent in 2020 and while there is huge uncertainty in any current forecast, we expect this to rival the 6.4 per cent contraction of the early 1980s. We expect a rebound of 5.1 per cent in 2021, with growth forecast to return to above 2.5 per cent thereafter. B.C. will outperform a national contraction of eight per cent as the oil collapse also carves into economies in other provinces. 

While the economic pain is self-inflicted as authorities shut down parts of the economy, it is also necessary. A healthy population is required for the economy to prosper and these policies to stem the spread of COVID-19 address that. Unprecedented federal spending programs to bridge household incomes and businesses through the pandemic will hopefully mitigate much of the long-term damage. 

It is likely that the worst of the economic downturn is or is nearly over. Provinces are moving ahead with staged re-openings of economies, although there is no single blueprint for them all as the severity of the pandemic has differed across the country. 

In B.C., where the curve was relatively well contained, we expect a gradual re-opening into the summer months. This could take the form of elective medical procedures, re-openings of recreational facilities and retail stores. Restaurants and bars will take more time. The tourism sector will take much longer and will also reflect global border challenges. 

There won’t be a return to status-quo, but a mending of the economy is in sight. We still face a lot of uncertainty, for example, COVID-19 could re-emerge following an easing of restrictions, or we could see a second wave late this year which would likely mean a return to stricter containment measures. But, even with these unknowns, I remain optimistic of better days ahead. 

Check out Central1.com for more insight from the Economics team.