The COVID 19 pandemic that began in China in 2019 and has swept through the world over the last two years has had an enormous impact on the global economy. No country could have survived the dramatic lockdowns that saw businesses shut for months and citizens shut indoors whilst governments desperately tried to prevent the spread of the deadly virus.
And Canada was hit as hard as any country.
Here we look at some of the most significant impacts of the pandemic in Canada and how the future will look for the economy.
Lockdown, Recession and Unemployment
As in most countries, the lockdown imposed by the Canadian government led to recession as much of everyday economic activity was curtailed completely. With social distancing rules in place and eventually full lockdowns where people were confined to their homes, service industries like bars and restaurants, and high street shops, all had to close completely.
From March 2020 almost all shops were closed, except for essential ones like pharmacies and grocery stores. This, along with other enforced closures brought about through lockdown caused mass loss of jobs with the result that by May 2020 unemployment stood at 13.5% as 500,000 applied for unemployment benefit in a single week, an 18-fold increase on the previous month.
The month of March 2020 was also the time when the World Health Organisation declared this to be a worldwide pandemic and it was the period when most governments were spurred into drastic steps to prevent further spread of the disease and more deaths.
At this time, Justin Trudeau announced the $1 billion response fund and shut the doors to any foreign travellers except those from the States.
How Was Each Sector of the Economy Affected?
There were few businesses that didn’t suffer from the impact of COVID 19. A small number, including Amazon of course, benefited as online sales rocketed. However, for many the story was one of a struggle for survival, and sadly for some, the end of their activity. High street shops and any business that relied on footfall, including bars and restaurants, as well as theatres, cinemas and clubs, travel companies and travel insurance firms all took a major hit.
The agriculture sector also went through a tough time between 2019 and 2021 as it became difficult to source workers. In Spring 2020 the government announced a $252 million subsidy for the industry to attempt to keep farms running, but it fell far short of the $2 billion that the Federation of Agriculture were calling for.
Other industries who suffered include gambling, with casinos in Alberta, Ontario and British Colombia all shut down for prolonged periods. At the same time, in the virtual world operators thrived with online casinos in Canada reporting record turnover, particularly in the second half of 2020 as punters stuck home in lock downs spend more time playing games online.
The sporting calendar also took a major hit with all professional Hockey and Soccer leagues suspending their seasons in 2020. Whilst other sorts like Golf continued, they did so without spectators.
Perhaps the biggest indicator of the impact of COVID on the Canadian economy was the state of the Stock Market, represented by the Toronto Stock Exchange. On 12th March 2020 circuit breakers were triggered twice in a 24 hour period as the index declined by 12%, its biggest fall since 1940. Overall between February 20th and 16th March the index dropped more than 30%.
After the cataclysmic events of the past 2 years the good news is that some countries, Canada included, have seen a relatively swift short-term recovery as lock downs are eased and consumers return to the high street. This summer one recovery tracker put the Canadian economy at just 2% under where it was at pre-pandemic levels.
But whilst there are some positives to take from the current situation as the world begins to emerge from this catastrophe, the road to recovery will be a long one with many still unemployed and big personal and national debts to be paid off. In truth it will be many years before the Canadian economy can truly be said to be back to normal.