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COVID-19 has changed Canada’s economy

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Every facet of Canadian life has been changed by the current pandemic, from how and where we live, to how we shop, eat and work. While not all changes have been for the better, COVID-19 could bring about some positive changes to Canada’s economy.

Where we live

The pandemic has certainly wreaked havoc on one of the traditional pillars of Canada’s economy — the housing market.

Physical distancing requirements at the onset of the pandemic in March walloped the real estate industry because realtors couldn’t host open houses, and buyers were concerned about the future. This year was the worst April for home sales in almost 40 years, and May was only slightly better.

Realtors are quick to say the slowdown is just a blip, and that demand remains strong. But policy-makers are clearly a little bit concerned. The Bank of Canada is expecting COVID-19 will cause mortgage deliquencies to more than double the peak they hit during the financial crisis of 2009, and Canada’s national housing agency is expecting prices could drop by almost 20 per cent before rebounding starting in 2022, or later.

Lower prices are bad news for sellers, but a slowdown does represent an opportunity for buyers looking to jump to a market that had gotten away from them.

COVID-19 has prompted lenders to cut mortgage rates to record lows, a welcome development for buyers. And those lower rates are helping  current homeowners, too.

Lowestrates.ca, a comparison website for mortgages, insurance and loans, is seeing interest in refinancing skyrocket right now.

 

Home sales are plunging, but new buyers are being offered the lowest interest rates on record. Existing owners are refinancing, too. (Joan Dymianiw/CBC)

 

“We have seen a huge increase in the number of consumers coming to our site to compare rates and see if they can save money by breaking their current mortgage and renewing early or refinancing,” said CEO Justin Thouin.

Where we work

The pandemic is also affecting commercial real estate. It may have started a small shift away from the standard downtown office towers, as many question how much they want to live and work in dense urban areas if they don’t have to.

Public transit use plummeted during the pandemic, and has yet to recover even as the economy has started to reopen.

 

 

Toronto’s cash-strapped transit system has missed out on almost $100 million worth of fares, city officials said recently, without a corresponding decline in the costs of running the system.

Bike sales are booming and bike lanes are experiencing a renaissance. But as a partial recovery of oil prices may suggest, even the much-maligned car could see higher demand as consumers opt for the safety and security of their own self-contained travel bubbles.

“This makes perfect sense as no one wants to be in a crowded space currently for themselves or others,” said Mark Le Dain, head of business intelligence and strategy at Validere, a data intelligence firm that advises companies in the energy sector.

How we shop

Retail is another sector of Canada’s economy that has taken the pandemic on the chin. New numbers released last Friday showed retail sales fell by more than a quarter in April, their biggest plunge on record.

 

Retailers in Canada were hit hard by the pandemic, but experts say the ones who will survive and thrive will be more nimble. (Cole Burston/Bloomberg)

 

While some stores are doing well (business at grocery stores is booming, for example),stores that sell discretionary items are being hit hard for the most part as consumers focus on what they need to get by.

Widespread store closures hit just about every chain, and it looks like many may not recover. Retail stalwarts such as Reitmans and Aldo have sought protection from their creditors in recent weeks, as the pandemic exacerbated the problems they were dealing with already.

Online shopping, on the other hand, is proving to be one of the pandemic’s biggest successes. Online sales more than doubled in April and now make up almost 10 per cent of everything sold in Canada — the biggest proportion on record.

The Canadian chains that ran into trouble were lacking on the e-commerce side, but retail experts say the crisis prompted businesses to dive into the world of retail online.

“Retailers and suppliers have been forced to build out online shopping capabilities at an accelerated rate,” said retail consultant Bruce Winder. “Consumers now have the convenience of being able to buy almost anything online and have it delivered or use curbside pickup.”

 

While overall sales are down, some sectors such as grocery stores and alcohol stores are booming. (Joan Dymianiw/CBC)

 

There’s perhaps no better example of the boom in online selling than the rise of Shopify, the Ottawa-based company that helps real-world stores sell online. Shopify was valued at barely over $1 billion when it went public five years ago. Last month, it passed the Royal Bank of Canada to become the most valuable company in Canada — worth more than $140 billion at last count.

Shopify is a great example of the type of company that could be set to thrive in the post-COVID economy: nimble, innovative and digitally focused.

Tech companies like Shopify represent a small but growing part of Canada’s economy. The tech sector has grown twice as fast as the rest of the economy in the last decade, and now makes up five per cent of Canada’s entire GDP, according to the Bank of Montreal.

 

Canada’s technology sector is now about five per cent of the entire economy, growing much faster than any other part. And while IT has been hit by COVID-19, the impact hasn’t been as dramatic, either. (Scott Galley/CBC)

 

Even tech hasn’t been immune to the slowdown of COVID-19, but the sector hasn’t plunged by nearly as much as others. The resilience of Canada’s technology sector is an encouraging sign as Canada’s economy tries to reorient itself for the post-pandemic reality.

How we work

The sea change of COVID-19 has impacted Shopify itself, as the company recently announced it will now allow its employees to work from home permanently, should they desire. The company has a stylish headquarters in downtown Ottawa.

Such a move would have been considered unthinkable not too long ago, but the pandemic has hurried along changes in the way Canadians work.

One positive trend emerging from COVID-19 is it has turned flexible work from something that companies used to pretend to care about, into a must-have for any firm hoping to thrive long term, said Jennifer Hargreaves, entrepreneur and founder of recruitment agency tellent.

The shift was underway before COVID-19, but has certainly accelerated during the pandemic, she said.

“This is very much about collaboration and making work work better for everybody,” Hargreaves said.

Instead of trying to fix a broken system, companies hiring top talent today are taking flexibility seriously. “That’s where you’re going to see companies thrive,” she said. “That old way of thinking about the economy is not going to be sustainable.”

Source: – CBC.ca

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Economy

Canadian economy posts worst showing on record in 2020 – Global News

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The Canadian economy posted its worst showing on record in 2020 as the COVID-19 pandemic swept across the country shutting down businesses and putting people out of work.

Statistics Canada says real gross domestic product shrank 5.4 per cent in 2020, the steepest annual decline since comparable data was first recorded in 1961.

The drop for the year was due to the shutdown of large swaths of the economy in March and April during the first wave of the COVID-19 pandemic that crushed the economy.

Since then, economic activity has slowly and steadily grown.

Read more:
Canada’s small businesses now have $135B in debt due to COVID-19, CFIB estimates

Statistics Canada says the economy grew at an annualized rate of 9.6 per cent in the fourth quarter of last year, down from an annualized growth rate of 40.6 per cent in the third quarter.

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That was higher than expected, with the average economist estimate at 7.5 per cent, according to financial data firm Refinitiv.

However, despite the better-than-expected result for the quarter as a whole, December eked out a 0.1 per cent increase, which followed a 0.8 per cent increase in November.

Read more:
Governor of Bank of Canada points to child care, education to help ease protracted employment recovery

Statistics Canada noted that total economic activity in December was about three per cent below the pre-pandemic level in February 2020.

Looking ahead to January, Statistics Canada said its early estimate was for growth in the economy of 0.5 per cent.

CIBC chief economist Avery Shenfeld wrote in a note that the early January figure should set aside fears of an outright downturn in the first quarter.


Click to play video 'Coronavirus: Canada’s economy could suffer in 1st quarter of 2021 with rising COVID-19 infections'



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Coronavirus: Canada’s economy could suffer in 1st quarter of 2021 with rising COVID-19 infections


Coronavirus: Canada’s economy could suffer in 1st quarter of 2021 with rising COVID-19 infections – Dec 15, 2020

Statistics Canada said wholesale trade, manufacturing and construction sectors led the increase, while retail trade fell to start the year.

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BMO chief economist Douglas Porter said the economy soldiered through second-wave restrictions better than anticipated, and may signal a better-than-anticipated quarter, and potentially year overall.

“Look for new growth drivers to kick into gear as the economy re-opens in stages through this year, leading to roughly (six-per-cent) growth – a nice mirror image to last year’s deep dive,” he wrote in a note.

“It’s not precisely a V-shaped recovery, but it’s very close.”

© 2021 The Canadian Press

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Canadian economy contracted 5.4 per cent in 2020, worst year on record – The Tri-City News

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OTTAWA — The Canadian economy posted its worst showing on record in 2020 as the COVID-19 pandemic swept across the country, shutting down businesses and putting millions out of work.

Statistics Canada says real gross domestic product shrank 5.4 per cent in 2020, the steepest annual decline since comparable data was first recorded in 1961.

The drop for the year was due to the shutdown of large swaths of the economy in March and April during the first wave of the COVID-19 pandemic that crushed the economy.

Since then, economic activity has slowly and steadily grown.

Statistics Canada says the economy grew at an annualized rate of 9.6 per cent in the fourth quarter of last year, down from an annualized growth rate of 40.6 per cent in the third quarter.

That was higher than expected, with the average economist estimate at 7.5 per cent, according to financial data firm Refinitiv.

However, despite the better-than-expected result for the quarter as a whole, December eked out a 0.1 per cent increase, which followed a 0.8 per cent increase in November.

Statistics Canada noted that total economic activity in December was about three per cent below the pre-pandemic level in February 2020.

Looking ahead to January, Statistics Canada said its early estimate was for growth in the economy of 0.5 per cent. 

CIBC chief economist Avery Shenfeld wrote in a note that the early January figure should set aside fears of an outright downturn in the first quarter.

Statistics Canada said wholesale trade, manufacturing and construction sectors led the increase, while retail trade fell to start the year.

BMO chief economist Douglas Porter said the economy soldiered through second-wave restrictions better than anticipated, and may signal a better-than-anticipated quarter, and potentially year overall.

“Look for new growth drivers to kick into gear as the economy re-opens in stages through this year, leading to roughly (six-per-cent) growth  — a nice mirror image to last year’s deep dive,” he wrote in a note.

“It’s not precisely a V-shaped recovery, but it’s very close.”

This report by The Canadian Press was first published March 2, 2021.

The Canadian Press

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2020 was the worst year on record for Canada's economy. It shrank by 5.4% – CBC.ca

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Canada’s economy shrank by 5.4 per cent last year, official data from Statistics Canada showed Monday, making 2020 the worst year for the country’s economic output since record keeping began.

The data agency said Tuesday that Canada’s gross domestic product — the total value of all goods and services it produced — grew by 2.3 per cent during the last three months of the year, but that was nowhere near enough to offset the record-setting plunge it experienced during the the middle half of 2020.

Since bottoming out in the spring and early summer, economic activity has slowly, steadily grown.

For comparison purposes, Canada’s economy contracted almost twice as much as the U.S. did during the COVID-19 pandemic, despite the U.S. seeing far more cases per capita.

Preliminary data suggests the U.S. economy shrank by 3.5 per cent last year.

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