The way out of COVID-19's economic hole looks slow, uneven and bleak: Fiscal snapshot
OTTAWA – The government believes rebuilding Canada’s COVID-19 crippled economy will be a slow, drawn out and uncertain challenge extending for years, even if the virus remains relatively contained.
That slow forecasted recovery projected in the government’s fiscal “snapshot” comes despite the billions of economic support measures the government laid out this spring, which have added up to a stunning $343 billion deficit for this coming year.
The government used its own numbers and an average of several private sector forecasters and though they offer a range there is wide agreement unemployment will be higher and GDP lower even at the end of 2021 than they were before COVID-19 hit.
The snapshot report suggests there will be some economic growth this summer and into fall, as more businesses reopen and life returns to some semblance of normal, but warns to expect ups and downs.
“Overall the recovery path is uncertain and fundamentally linked to the equally uncertain health outcomes,” reads the report.
It also warns to expect an uneven recovery, retail, tourism and hospitality business, were hit harder than others and the government warns they could also come back at different speeds.
“There is a risk that certain sectors of the economy will face greater difficulties in the months ahead, as the contend with new health and safety regulations, changing consumer preferences and an uncertain global recovery.”
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Unlike a full budget or fiscal update, the document the government presented Wednesday does not outline any new economic measures.
Finance Minister Bill Morneau said the government intends to focus on growth in the recovery, but first Canada has to navigate the current situation.
“The dynamic nature of the challenge is such that we are not going to make assumptions about what we can’t know today,” he said.
He said at this point, the government hasn’t outlined plans for a stimulus or other program to help grow the economy more quickly.
“We have not provisioned for the next phase it will be very dependent on our success of what we are doing right now.”
Morneau did rule out any tax increases as a way to pay for these rising debts and deficits.
“We think raising taxes would be exactly the wrong response,” he said. “We should be trying to grow our economy.”
The government’s forecast are based on the situation as it stands and the document warns repeatedly that a downturn in the public health situation could be catastrophic for the economy. A full resurgence with renewed lockdowns in the fall would result in much more economic pain, which would extend well into 2021.
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