A second wave of COVID-19 and another round of sweeping lockdowns could have a “very serious” impact on the Canadian economy and must be avoided, Bank of Canada Deputy Governor Lawrence Schembri said on Thursday.
Schembri, taking questions from a business audience, said employment and spending had dropped sharply since mid-March when “a fairly broad-based lockdown” was imposed.
Canadian officials shuttered most non-essential businesses and urged people to stay home to slow the spread of the coronavirus. In recent weeks, most regions have gradually started to reopen.
“If a second wave was relatively severe as the first wave was … I think that could … have another very serious impact on the Canadian economy,” Schembri said. “We need to avoid that happening again.”
Story continues below advertisement
Earlier, Schembri said Canada’s central bank expected the economic recovery to have two phases and be prolonged and uneven, with a relatively quick reopening and then a longer recuperation, which will vary by region.
Households, the bank said, would remain cautious with their spending until a coronavirus vaccine is available.
5:49 Can Canada handle a 2nd wave of COVID-19?
Can Canada handle a 2nd wave of COVID-19?
“The uncertainty around this recuperation stage is extraordinary and points toward a recovery that will be gradual and long-lasting as this uncertainty slowly dissipates,” he said.
“Cautious spending behavior on the part of households will likely continue until a vaccine becomes available.”
Bank of Canada Governor Tiff Macklem said on Tuesday the bank remained focused on using its policy tools to support Canada’s economic recovery. The bank slashed its key interest rate three times in March to a record-low 0.25 per cent.
Mortgage and other credit deferrals have helped keep Canadians from seeking additional loans, Schembri said, adding people could fall behind on payments if incomes do not recover when deferrals end.
The Canadian dollar maintained its earlier decline, down 0.3% at 1.3610 to the greenback, or 73.48 U.S. cents.
OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.
However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.
The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.
Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.
The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.
The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.
This report by The Canadian Press was first published Oct. 17, 2024.
OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.
In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.
The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.
Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.
In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.
It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.
This report by The Canadian Press was first published Oct 16, 2024.
OTTAWA – Statistics Canada says manufacturing sales in August fell to their lowest level since January 2022 as sales in the primary metal and petroleum and coal product subsectors fell.
The agency says manufacturing sales fell 1.3 per cent to $69.4 billion in August, after rising 1.1 per cent in July.
The drop came as sales in the primary metal subsector dropped 6.4 per cent to $5.3 billion in August, on lower prices and lower volumes.
Sales in the petroleum and coal product subsector fell 3.7 per cent to $7.8 billion in August on lower prices.
Meanwhile, sales of aerospace products and parts rose 7.3 per cent to $2.7 billion in August and wood product sales increased 3.8 per cent to $3.1 billion.
Overall manufacturing sales in constant dollars fell 0.8 per cent in August.
This report by The Canadian Press was first published Oct. 16, 2024.
