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.
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.
Chart on growing bus ridership over the last few weeks, presented at today’s TTC board meeting. Back at 30% of pre-pandemic ridership. <a href=”https://t.co/FR1QILEJxv”>pic.twitter.com/FR1QILEJxv</a>
“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.”
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.
