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 – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
