Moody’s said it believes the effects will last for years, notwithstanding a relatively quick recovery.
“We expect economic activity as measured by GDP to return to its pre-coronavirus path by the end of 2021, but an elevated unemployment rate and a lagging recovery in the hardest hit sectors will leave visible bruises,” it said.
Additionally, the growth in both government and corporate debt is “likely to last for several years,” it said.
In the short term, though, Moody’s said the prospects for a return to pre-pandemic GDP levels this year look good. The downturn “has not stressed the financial sector, does not result from a burst credit or real estate bubble and pandemic-related supply disruptions will pass,” it said.
Typically, the recovery following a financial crisis or a burst real estate bubble takes a long time “because damage to banking system balance sheets keeps banks from providing credit to the economy for years” and it takes time to repair corporate and household balance sheets.
In this crisis, the number of bankruptcy filings and defaults has been lower than usual, Moody’s said.
“Pandemic disruptions are creating losses on capital stock (for example, hotels and aircraft), but these are a small share of the economy, and the disruptions are also spurring new investment in digital technologies,” it said.
“Once the pandemic has receded and lockdown measures are rare, consumers will regain confidence,” it noted.
That said, it also suggested that businesses in the hardest-hit sectors will take longer to recover.
“For high-contact travel and tourism-related sectors, recovery will likely lag until anxiety about coronavirus wanes and international restrictions are lifted,” it said.
The recovery will be faster in sectors such as retail, health care and education that pivoted to digital delivery during the pandemic, but the labour force will need to “re-skill for the new digital economy, which will take time,” Moody’s said.
Additionally, the report said that higher levels of corporate and government debt are one consequence of the pandemic that will last.
These elevated debt levels “will likely weigh on growth over the next five to 10 years,” it suggested.
“In the next two years, central banks will manage the debt burden with low interest rates and tolerance for periods of higher inflation, but over time, if governments and companies need to direct funds to repaying debt rather than toward investments it would constrain economic growth,” the report said.
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
