Government officials believed in late summer that an economic recovery would not magically follow if lockdowns and public health restrictions disappeared, a newly obtained federal document shows.
The internal briefing note says a key to recovery is the level of trust people have in their government’s ability to contain the spread of COVID-19.
The Canadian Press used the Access to Information Act to obtain the Finance Department briefing note, prepared in early September.
While restrictions and lockdowns are common ways to reduce transmission of the novel coronavirus, the note also lays out other options, including increased testing and contact-tracing.
It says countries that have managed to reduce transmission of the virus to very low levels have seen more people visit retailers, use transit and head to workplaces.
Countries that haven’t kept COVID-19 under control, including those where restrictions have been loose or non-existent, “have had a much more uneven recovery,” says the briefing note.
“Lifting restrictions is not sufficient for a full economic recovery,” the note reads, adding that “evidence has shown that to unleash demand, it is critical that individuals also feel safe and confident in the ability of their government to contain the virus.”
A ‘patchwork’ approach
The words in the briefing document echo much of what the government heard over the fall — and more recently, after the Liberals pledged to spend up to $100 billion if necessary on an economic recovery plan.
“Restoring public confidence in the economy requires systematic, widespread and rapid testing and contact tracing — something we have been calling for since the spring,” said Robert Asselin, senior vice-president for policy at the Business Council of Canada.
“Nine months into this crisis, it is still not in place in most of the country. The patchwork approach to testing and tracing has been inefficient and very costly from both a health and economic standpoint.”
Nearing the end of the year, Canada had recouped just over four-fifths of the three million jobs lost in the spring, and real gross domestic product was about four per cent below pre-pandemic levels after posting a historic decline in the second quarter.
Aiding in that rebound were low levels of COVID-19 transmission, which suggests “Canada has managed to balance both the health and economic risks related to the pandemic relatively well,” the briefing note says.
“Nevertheless, the experience of other countries that have witnessed resurgent or second waves of infection suggest that health risks will remain a threat as we move into the fall and further along the economic recovery path.”
Fresh hope for 2021
Canada’s economy ticked along even as case numbers grew, providing what experts say is an inkling of hope for 2021 despite the imposition of new restrictions in parts of the country.
The restrictions have hit some sectors harder than others. The briefing note foreshadowed how provinces and municipalities may have to more readily close or limit hours for some businesses, such as restaurants and bars, “and will need to be equipped to rapidly identify and trace outbreaks.”
The briefing note also says efficient contact-tracing “goes hand-in-hand” with testing to reduce transmission. By the time the briefing note was written, testing had hit about 48,000 per day in Canada, or abut 0.13 per cent of the population, as of the end of August.
“Evidence varies on the appropriate level of testing, but increased capacity and more rapidly available testing would be an important asset to the economic recovery in the fall,” officials wrote.
Trevin Stratton, chief economist at the Canadian Chamber of Commerce, said the country needs to start using more rapid tests to get ahead of COVID-19 while officials work to roll out vaccines.
“By knowing who has been recently exposed to the virus, in many cases even when people are infected but asymptomatic, we can contain its spread through accurately targeted responses,” he said.
“This approach will limit the need for blanket response measures like lockdowns, which cause serious collateral damage.”
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.
