A leading Canadian think tank has projected that the country’s economy is now in recession thanks to the economic impact of the Covid-19 pandemic.
The Toronto-based C D Howe Institute’s Business Cycle Council made this official even as it stated that the first quarter of 2020 was historic in the sense that the country recorded its highest ever drop in GDP, at a 2.6 per cent fall. Statistics Canada has estimated that Canada’s GDP took a nine per cent hit in March alone, as the economic impact of the coronavirus crisis rattled the economy with several sectors being shut down. March also saw a 5.3 per cent drop in employment in the nation.
The Council’s decision to declare a recession was based on preliminary data available on April 30 and it stated that while revisions to GDP figures will occur, they are “extremely unlikely to be significant enough to alter the recession call.”
This sobering announcement came as the country recorded over 55,000 Covid-19 cases with 3,391 deaths.
Already, nearly seven million Canadians, approximately a fifth of the country’s population, have availed of an emergency fund established by the Government to counter the adverse economic impact of the Covid-19 pandemic. A note published by the Parliamentary Budget Office estimated that total could increase by 20 per cent, to about 8.5 million using the Canada Emergency Response Benefit, which was announced by Prime Minister Justin Trudeau and is scheduled to last four months, beginning with March.
With a subsidy programme also being introduced to support businesses in retaining employees, the budget deficit will go over CA$ 252 billion. Decisions on how the Government will deal with the looming economic crisis have yet to be made, and Trudeau made it clear that facing the current challenges caused by Covid-19 will remain the priority for the short-term. Right now, he said during a media briefing after a session of Parliament, the “focus is on getting through this together as a country.”
“There will be time after this is all done as we figure out how exactly this unfolds, where we will have to make next decisions on how that recovery looks,” he said.
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