TEC Canada is pleased to provide the Andersen Monthly Economic Report exclusively to our members. The former assistant chief of the Bank of Canada’s research department, Dr. Peter Andersen provides valuable economic insight to help you make better business decisions.

What matters now is where the virus is heading – a best case scenario would see the virus peak before mid-year, stabilizing the U.S. and Canadian economies this summer and eventually leading to growth. News out of South Korea gives hope of turning the corner on COVID-19; with any sign of new cases decreasing, the financial markets would respond very quickly and although the recession would be steep, it would be short-lived. Canada, however, will recover much slower economically compared to the U.S. given the weak economic status prior to the crisis.

Canada:

  • Flat retail sales, poor private sector employment since last summer, slumping business investment and flat numbers in non-energy exports since mid-2018 will pose a real challenge to exit a recession. However, this deep decline may see a more gradual upward slope compared to the U.S. on the other side of the recession; the U.S. could see a V-shaped recovery where Canada’s may resemble a check mark
  • Given Canada’s pipeline of projects in the construction sector prior to the outbreak, the construction industry, both residential and non-residential, should be one of the first to recover
  • The combined emergency fiscal measures announced by Prime Minister Trudeau on March 18th and March 27th amounts to almost 7% of GDP

United States:

  • The Fed has learned from the last crisis and is doing more than cutting rates; not only has its policy response been broad, it has also been swift
  • The big difference from 2008 is the purchase of corporate bonds
  • Unemployment rate could reach 30% in the 2nd Quarter and 2nd Quarter GDP could show a decline as large as 24%
  • Similar to Canada, the construction industry, again both residential and non-residential, is expected to be one of the first to recover

International:

  • The global economy appears to show a larger percentage decline than in 2009
  • A recovery in oil prices is not expected anytime soon; this is bad news for Canada’s economy and Alberta in particular
  • Emerging market countries find themselves in a fragile position as they are burdened by unsustainable private and public debt, including USD denominated foreign debt

ADDITIONAL RESOURCES

CNBC: Op-Ed: Emerging markets have limited firepower to tackle a coronavirus-fueled recession

Time: China Says It’s Beating Coronavirus. But Can We Believe Its Numbers?

Financial Post: ‘They are completely intertwined’: Tentative signs of recovery in China help some Canadian companies weather COVID-19 storm

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