Canada’s economy will be in a state of shock as a result of the Chinese Communist Party (CCP) Virus crisis, but after the dust settles there could be significant changes in the economy, experts say.
Philip Cross, a senior fellow at the Macdonald-Laurier Institute and a former chief economic analyst with Statistics Canada, told The Epoch times that until the virus is contained and eradicated both in Canada and internationally, the economy won’t recover.
The federal government has already announced tens of billions in a fiscal stimulus package to help prevent the economy from entering into a recession.
Cross notes that Canada’s economy was already weak entering the crisis, as real GDP growth was 0.1 percent in the last quarter, and the same or weaker performance is expected this quarter due to the rail blockades and the global slowdown.
He notes that the dominant theme the past decade in Canada has been slow growth and mounting debt. And while he speculates that the virus crisis will mean slow growth is here to stay, Canadians will likely become more averse to debt as a result of the crisis, he says.
“While government debt will soar in the short term, it is hard to see how households and businesses remain confident about taking on debt when the risks of losing income and jobs, and hence not being able to service debt, become so suddenly obvious,” he said.
One aspect of the economy that may experience a significant shift is how companies are going to change their use of global supply chains, Cross said.
“This [crisis] may accelerate the focus on regional trade and supply chains, for which the adoption of the USMCA is a good framework.”
He notes that if everyone starts selling assets to reduce debt burden despite low interest rates, demand will be dampened and recovery will be slowed for potentially a long time.
Livio Di Matteo, a professor of economics at Lakehead University, told The Epoch Times that Canada will be in a period of “major economic shock” on both the supply and demand side, given the disruption to supply and production chains and the significant slowdown in consumer and business spending levels.
In addition, the fact that “’team players’ like Russia or Saudi Arabia make things worse as they have with their oil production squabble” will “provide the final push to conditions that were already driving a potential Canadian slowdown.”
Di Matteo said sectors that deliver non-essential consumer spending, such as restaurants and tourism-related industries, will be hit the hardest, while sectors dealing with essentials such as food will do better. Online service and shopping delivery services will also get a boost.
Despite these disruptions, he predicts that once the crisis is over, since it’s an “animals spirits” driven crisis—a term used by economists to refer to emotions and instincts guiding investor and consumer behaviour—there will be a “fairly rapid resumption of activity and pretty quick bounce-back from any recession in Canada.”
Di Matteo also predicts permanent change in global behaviour in some sectors.
“Just as 9-11 changed global trade, travel, and interactions in many ways, this too may result in changes in travel mobility especially,” he said. “The openness of borders that marked the second age of globalization from the 1990s to the present may fade.”
On the health care front, Di Matteo notes that while Canada has a very good system despite being one of the largest health care spenders in the OECED, it has one of the lowest per capita amounts of hospital beds and physicians.
“A case in point, Italy has much higher bed and physician numbers per capita and it is still being overwhelmed,” he said. “Canada’s hospital system has been at capacity for years and there really is no slack.”
Cross also said Canada’s health care system is very costly compared to other similar countries, but delivers “below-average” results.
The crisis may “shake our complacency about health care and force some needed reforms,” he said.
The Epoch Times refers to the novel coronavirus, which causes the disease COVID-19, as the CCP virus because the Chinese Communist Party’s coverup and mismanagement allowed the virus to spread throughout China and create a global pandemic.