Chapter 2
Economic and Fiscal Profile

COVID-19 in Canada

The COVID-19 pandemic is a global crisis that poses an unprecedented threat to our health. There is no effective treatment or vaccine. The virus is highly contagious–contagious even in asymptomatic and presymptomatic people–and infection can result in severe and fatal outcomes, particularly in older adults and people with underlying medical conditions. This disease is spreading rapidly around the world, with now over 11,000,000 cases worldwide, but actions by public health authorities in Canada have been able to control the spread at home.

In early March, as an exponential rise in cases was reported, governments across Canada took wide-ranging steps to mitigate and contain the spread of COVID-19. Restrictive public health containment measures were put in place such as closing schools, businesses, spaces of worship, and other gathering places, and cancelling mass gatherings. Across Canada, governments put in place, travel restrictions and stay-at-home policies.

Canadian expertise, informed in part by the experiences of other countries in controlling the virus, allowed Canada to act decisively and deliver support where it was needed the most. While Canada flattened the curve sooner than a number of countries, other jurisdictions have demonstrated stronger epidemic control to drive case counts down more rapidly (Chart 2.1) and Canada will need to continue to be vigilant. This is an ongoing effort, requiring sustained public health measures to avoid resurgent transmission.

Chart 2.1
Daily New Cases of COVID-19 In Canada Compared To Other Countries
(population adjusted)
For details, see text version.

Source: Public Health Agency of Canada.

  • text version
    Brazil Canada France Germany Italy Japan Mexico Russia South Korea Sweden United Kingdom United States
    0
    1 0.1 0.3 0.2 0.2 0.3 0.1 0.1 0.1 0.2 1.7 0.2 0.0
    2 0.1 0.4 0.3 0.2 0.5 0.1 0.2 0.1 0.5 2.6 0.3 0.0
    3 0.1 0.6 0.4 0.2 0.7 0.1 0.2 0.2 1.1 3.3 0.3 0.2
    4 0.2 0.7 0.4 0.4 0.9 0.1 0.2 0.2 1.6 4.2 0.5 0.3
    5 0.3 1.0 0.6 0.6 0.9 0.1 0.3 0.2 2.2 6.0 0.6 0.4
    6 0.4 1.3 0.8 0.8 1.5 0.1 0.3 0.4 2.6 7.8 0.7 0.5
    7 0.6 1.9 1.2 1.1 2.1 0.1 0.4 0.3 3.3 10.0 0.8 0.7
    8 0.7 2.3 1.8 1.3 2.4 0.1 0.3 0.4 4.6 11.0 1.0 0.9
    9 0.9 2.7 2.1 1.7 3.5 0.1 0.5 0.5 5.9 11.6 1.4 1.2
    10 1.1 3.4 2.6 1.7 4.1 0.1 0.6 0.6 7.5 12.2 2.1 1.4
    11 1.3 4.3 3.4 1.8 4.5 0.1 0.7 0.8 8.7 11.7 2.4 1.7
    12 1.4 4.4 4.3 2.1 6.4 0.1 0.8 0.9 9.3 11.7 2.6 2.3
    13 1.6 6.3 5.2 3.2 7.6 0.1 0.8 1.1 10.6 11.2 3.4 3.5
    14 1.7 8.3 6.5 4.1 8.9 0.2 0.9 1.4 11.3 11.8 4.7 5.5
    15 1.9 10.2 7.6 5.1 11.3 0.2 1.1 1.8 11.1 11.5 5.8 7.6
    16 1.8 12.0 9.2 6.4 13.5 0.2 0.9 2.1 10.9 12.2 6.8 10.4
    17 1.8 14.0 11.1 8.4 16.9 0.3 1.1 2.7 10.0 12.5 8.3 13.7
    18 2.4 16.3 12.7 10.1 18.7 0.3 1.2 3.1 9.4 15.4 9.2 18.2
    19 3.0 18.4 14.6 11.4 22.2 0.3 1.3 3.4 8.8 16.9 10.9 21.2
    20 3.4 20.4 17.3 20.3 26.6 0.3 1.5 3.8 7.5 19.3 13.1 26.0
    21 3.8 22.0 19.1 26.3 30.8 0.4 1.8 4.5 6.7 19.9 14.8 31.2
    22 4.3 24.0 21.2 30.4 36.1 0.4 2.0 5.1 5.8 23.8 18.0 37.0
    23 4.7 27.5 22.6 34.3 41.1 0.4 2.3 5.8 4.7 25.1 22.6 42.6
    24 5.1 29.6 28.2 39.9 44.5 0.4 2.4 6.5 3.6 28.1 25.9 46.9
    25 5.5 31.8 31.1 42.0 50.5 0.4 2.6 7.7 2.8 30.2 29.7 51.4
    26 6.2 34.9 34.3 48.7 55.0 0.3 2.9 8.8 2.4 34.0 33.2 58.5
    27 6.8 35.0 38.7 48.4 61.4 0.3 2.9 10.3 2.2 37.1 36.6 64.2
    28 7.2 35.4 43.4 52.1 69.5 0.3 3.0 11.8 1.8 42.3 42.8 69.4
    29 7.1 36.3 49.3 53.5 76.7 0.3 3.0 13.5 1.9 41.8 47.3 75.4
    30 7.5 36.0 51.5 56.0 81.4 0.3 3.2 15.6 1.9 43.7 50.6 81.6
    31 7.8 36.5 52.7 56.3 85.1 0.3 3.4 17.6 2.0 44.4 53.2 84.7
    32 7.9 35.3 63.6 61.6 89.2 0.3 3.7 19.9 2.0 45.5 60.6 88.7
    33 8.5 33.7 67.7 63.7 91.5 0.4 4.1 22.9 2.0 48.5 63.2 91.5
    34 8.6 34.3 63.9 64.4 93.5 0.4 4.3 26.8 2.0 51.3 64.5 93.9
    35 9.6 34.8 66.9 64.0 93.4 0.5 4.6 28.5 2.0 50.4 67.0 96.1
    36 10.8 34.5 66.2 67.4 92.1 0.6 5.3 31.3 1.9 51.8 67.2 97.3
    37 11.2 35.5 64.6 65.5 91.2 0.7 6.0 33.1 1.9 51.0 68.8 94.8
    38 11.7 37.2 63.6 64.2 89.5 0.9 6.8 34.4 1.9 52.3 79.5 95.7
    39 12.1 38.1 55.5 61.7 86.7 0.9 7.2 36.2 1.9 52.4 78.2 93.2
    40 11.9 39.5 53.4 59.7 85.6 0.9 7.3 37.4 1.9 49.0 79.3 91.3
    41 13.0 42.4 58.1 58.2 82.1 1.0 7.6 37.7 2.1 47.5 82.8 90.2
    42 13.2 43.2 56.2 54.9 78.9 1.4 8.2 39.6 1.8 49.3 80.9 89.3
    43 14.9 44.9 53.7 49.5 76.1 1.6 8.2 40.3 2.0 51.3 81.5 89.3
    44 15.8 45.6 53.2 47.5 74.0 1.8 8.6 40.9 2.0 54.5 82.3 89.4
    45 17.7 45.5 50.5 44.5 72.9 2.0 8.9 43.2 1.9 53.5 75.5 88.0
    46 19.6 45.6 54.2 41.9 70.5 2.1 9.3 45.3 1.8 54.1 76.7 89.4
    47 22.1 46.0 51.5 38.3 68.3 2.2 10.0 48.9 1.7 56.9 77.4 93.9
    48 24.5 44.3 48.0 34.9 67.2 2.3 10.6 53.1 1.5 58.9 75.4 88.3
    49 26.3 44.1 39.6 34.0 65.7 2.3 10.5 57.5 1.7 60.8 75.1 86.1
    50 25.9 43.4 38.5 33.4 65.4 2.7 11.1 61.1 1.2 60.8 75.0 86.4
    51 26.8 42.3 36.7 32.1 64.9 3.9 11.8 65.8 1.1 59.4 74.5 88.8
    52 28.1 42.5 35.4 31.6 63.8 4.1 12.2 69.9 0.8 57.9 73.2 89.7
    53 29.2 43.2 29.3 31.2 63.7 4.3 12.9 72.6 0.8 60.0 70.2 87.3
    54 32.1 47.8 27.6 30.3 60.9 4.7 13.1 73.8 0.7 60.0 69.5 81.5
    55 33.9 46.6 25.5 28.5 59.9 4.9 12.9 74.1 0.6 60.6 68.8 86.1
    56 36.6 45.7 28.4 25.8 58.8 5.1 13.9 75.2 0.6 55.2 68.0 87.4
    57 40.5 45.2 26.2 24.6 56.0 5.0 14.2 76.0 0.5 54.5 71.1 86.5
    58 42.0 44.4 25.5 23.3 53.5 4.1 14.7 75.5 0.5 51.3 72.9 84.4
    59 41.3 43.2 29.2 22.2 51.4 3.9 15.3 74.2 0.6 53.0 72.6 83.8
    60 42.9 41.8 20.3 20.6 50.8 3.9 15.5 74.1 0.4 50.2 72.4 83.6
    61 43.5 35.6 19.8 19.1 52.5 3.8 16.1 72.5 0.4 50.5 71.7 83.5
    62 46.2 35.0 18.7 17.9 49.8 3.6 17.3 80.1 0.3 49.3 72.5 81.9
    63 49.7 34.6 16.2 15.9 48.7 3.5 18.1 77.7 0.3 52.3 77.1 81.4
    64 52.6 33.4 14.6 14.3 46.0 3.5 18.6 75.6 0.2 53.6 76.0 78.2
    65 53.4 32.2 14.3 13.7 44.3 3.2 19.2 74.4 0.2 55.9 72.7 76.8
    66 58.6 31.1 7.5 12.9 43.0 3.0 19.8 73.4 0.2 55.1 70.7 74.6
    67 64.1 31.0 13.1 12.5 41.5 2.8 21.2 72.2 0.2 56.6 69.8 72.8
    68 70.0 31.0 18.6 12.0 38.5 2.7 22.0 71.6 0.2 55.7 69.6 72.1
    69 73.1 30.7 17.5 11.3 36.7 2.6 22.0 62.0 0.2 55.3 67.5 70.6
    70 76.8 30.2 17.6 11.8 34.2 2.3 22.9 61.7 0.2 55.0 61.1 70.0
    71 77.9 29.9 16.8 11.6 33.1 1.9 24.3 61.3 0.2 52.5 56.7 69.4
    72 83.3 30.1 16.6 11.0 30.9 1.9 24.7 60.8 0.2 53.4 54.3 68.9
    73 82.3 29.9 16.3 11.4 29.6 1.9 25.0 69.3 0.2 51.8 53.4 68.3
    74 81.6 29.5 15.5 11.0 27.2 1.9 24.5 51.2 0.2 49.3 52.5 70.1
    75 82.0 29.3 7.6 10.6 25.7 1.7 25.0 60.7 0.2 50.5 50.0 69.1
    76 87.4 29.0 7.6 10.1 24.6 1.6 25.3 60.8 0.1 50.1 47.9 70.1
    77 91.6 28.6 7.5 9.0 23.1 1.4 25.8 60.7 0.1 50.3 39.8 69.6
    78 103.0 28.0 7.3 8.8 21.2 1.2 26.3 60.9 0.1 49.0 38.1 68.8
    79 103.4 27.3 7.1 8.8 19.8 1.0 27.5 61.4 0.1 46.3 37.5 67.4
    80 103.3 26.4 7.2 8.1 18.6 0.8 28.8 52.7 0.2 48.4 30.1 68.1
    81 111.9 25.0 6.8 8.1 19.4 0.7 29.6 61.5 0.2 50.8 34.0 67.0
    82 117.4 23.7 6.6 7.8 18.1 0.8 29.9 52.2 0.3 49.8 31.7 66.5
    83 120.5 22.8 6.0 7.0 17.1 0.7 30.2 52.2 0.4 49.6 35.2 64.5
    84 102.1 21.9 5.6 7.0 15.9 0.7 30.5 60.2 0.4 51.2 40.6 62.8
    85 118.9 21.2 5.4 6.8 15.4 0.7 31.6 60.1 0.5 54.8 39.1 63.4
    86 120.6 19.8 5.4 6.7 15.1 0.6 32.0 60.0 0.5 57.0 36.5 64.3
    87 123.4 18.7 5.1 6.5 14.4 0.6 33.0 60.2 0.5 55.5 39.9 64.0
    88 125.6 18.5 4.5 5.8 13.0 0.6 32.9 68.8 0.5 57.9 32.6 64.6
    89 128.5 18.1 4.1 5.1 12.4 0.4 33.7 68.8 0.4 79.8 32.5 65.5
    90 128.1 17.3 10.5 5.6 11.6 0.4 34.1 68.0 0.4 86.0 27.3 59.1
    91 145.8 16.1 10.9 5.8 11.3 0.4 34.6 59.4 0.4 90.3 27.0 65.6
    92 121.2 15.3 14.3 5.5 10.8 0.3 34.6 59.6 0.4 94.6 26.9 65.6
    93 119.9 14.5 14.6 5.6 10.5 0.3 35.6 58.6 0.3 100.4 25.9 65.2
    94 123.3 13.7 14.5 5.2 10.1 0.3 35.4 57.6 0.4 102.2 25.8 66.2
    95 125.3 12.7 12.3 5.2 9.1 0.3 36.8 56.1 0.4 102.4 24.5 65.3
    96 124.8 11.7 12.6 5.2 8.9 0.3 38.2 55.8 0.4 83.9 23.7 64.5
    97 119.5 11.0 7.2 4.8 8.8 0.3 39.5 55.2 0.4 89.4 23.9 71.7
    98 139.2 10.7 7.2 4.3 8.5 0.2 41.4 54.4 0.4 94.2 22.0 66.8
    99 148.0 10.4 4.6 4.3 7.9 0.3 41.9 52.1 0.6 98.4 20.9 65.8
    100 147.1 10.2 4.7 4.1 7.5 0.3 42.4 51.5 0.7 96.1 20.7 67.4
    101 148.8 10.2 4.5 4.3 7.2 0.3 36.8 50.3 0.8 101.2 20.4 66.0
    102 151.9 9.9 7.0 4.3 7.0 0.3 42.6 50.0 0.8 103.3 20.8 66.5
    103 159.1 9.7 7.4 4.6 6.4 0.4 41.1 48.3 0.8 108.2 20.3 68.7
    104 170.5 9.5 6.6 4.1 5.4 0.4 40.2 47.4 0.9 108.3 19.3 70.9
    105 165.1 9.5 6.9 4.0 5.4 0.4 39.3 46.7 0.9 88.8 19.5 71.9
    106 167.8 9.1 6.8 3.9 5.1 0.3 39.5 46.9 0.8 71.4 19.4 75.6
    107 177.8 9.1 6.9 3.9 4.7 0.3 . 46.5 0.7 61.8 19.0 78.5
    108 178.5 8.3 6.8 4.0 4.9 0.3 . . 0.8 91.5 18.7 81.4
    109 174.7 7.7 6.7 4.0 4.8 0.3 . . 0.9 104.9 18.1 86.3
    110 177.4 7.3 6.5 4.0 4.6 0.3 . . 0.9 108.4 18.1 91.1

Since March, Canada has made significant progress in bringing the epidemic under control. The coordinated public health approach, supported by strong federal-provincial-territorial collaboration and the cooperation and commitment of Canadians, has significantly reduced the transmission rate of the virus. As of June 21, the 7-day incidence in daily new cases in Canada has declined by about 80 per cent from a plateau of about 1,730 new cases per day on April 26 (Chart 2.2) – a dramatic improvement compared to the potential epidemic trajectory suggested by its rapid increase in March.

Chart 2.2
Daily Reported COVID-19 Cases and 7-Day Moving Average, Canada
(data as of June 30, 2020)
For details, see text version.

Source: Public Health Agency of Canada.

  • text version
    Daily reported cases 7-day moving average Backlog
    Mar08 6
    Mar09 6 7
    Mar10 18 9
    Mar11 24 12
    Mar12 37 16
    Mar13 43 21
    Mar14 51 27
    Mar15 75 36
    Mar16 100 50
    Mar17 173 72
    Mar18 128 87
    Mar19 148 103
    Mar20 208 126
    Mar21 290 160
    Mar22 103 164
    Mar23 617 238
    Mar24 701 314
    Mar25 617 383
    Mar26 634 453
    Mar27 714 525
    Mar28 898 612
    Mar29 665 692
    Mar30 1128 765
    Mar31 1143 828
    Apr01 1140 903
    Apr02 1554 1035
    Apr03 1252 1111
    Apr04 1481 1195
    Apr05 1494 1313
    Apr06 1155 1317
    Apr07 1230 1329
    Apr08 1394 1366
    Apr09 1474 1354
    Apr10 1383 1373
    Apr11 1170 1329
    Apr12 1065 1267
    Apr13 1297 1288
    Apr14 1383 1309
    Apr15 1316 1298
    Apr16 1727 1334
    Apr17 1821 1397
    Apr18 1427 1434
    Apr19 1432 1486
    Apr20 2045 1593
    Apr21 1591 1623
    Apr22 1768 1687
    Apr23 1920 1715
    Apr24 1778 1709
    Apr25 1466 1714
    Apr26 1541 1730
    Apr27 1605 1667
    Apr28 1526 1658
    Apr29 1571 1630
    Apr30 1639 1589
    May01 1825 1596
    May02 1653 1623
    May03 1443 1797 1317
    May04 1298 1753
    May05 1274 1717
    May06 1450 1700
    May07 1426 1669
    May08 1512 1625
    May09 1268 1570
    May10 1146 1339
    May11 1133 1316
    May12 1176 1302
    May13 1121 1255
    May14 1123 1211
    May15 1212 1168
    May16 1251 1166
    May17 1138 1165
    May18 1070 1156
    May19 1040 1136
    May20 1030 1123
    May21 1182 1132
    May22 1156 1124
    May23 1141 1108
    May24 1078 1100
    May25 1012 1091
    May26 936 1076
    May27 872 1054
    May28 993 1027
    May29 906 991
    May30 772 938
    May31 757 893
    Jun01 758 856
    Jun02 705 823
    Jun03 675 795
    Jun04 641 745
    Jun05 609 702
    Jun06 722 695
    Jun07 642 679
    Jun08 545 648
    Jun09 409 606
    Jun10 461 576
    Jun11 416 543
    Jun12 413 515
    Jun13 467 479
    Jun14 377 441
    Jun15 360 415
    Jun16 320 402
    Jun17 386 391
    Jun18 367 384
    Jun19 398 382
    Jun20 401 373
    Jun21 318 364
    Jun22 300 356
    Jun23 326 357
    Jun24 279 341
    Jun25 380 343
    Jun26 172 311
    Jun27 238 288
    Jun28 218 273
    Jun29 668 326
    Jun30 286 320
    Jul01

The initial wave of transmission has passed its peak, but the pandemic is far from over. In fact, as governments lift the more restrictive public health containment measures (for example, closing businesses) to minimize the associated economic and societal harms, it becomes important to double down on other essential public health controls, including improving case detection and isolation, contact tracing and quarantine, mask-wearing and adherence to physical distancing, to compensate and maintain epidemic control. And, as outlined in the Shared Public Health Approach to Support Restarting the Economy[1], the relaxation of some public health containment measures as provinces and territories have reopened has been coupled with strengthened protections for vulnerable populations, including seniors in long-term care facilities.

Modelled scenarios by the Public Health Agency of Canada reveal the critical role that public health measures have played, and will continue to play, in controlling the epidemic. They reveal that, without these controls, the impacts of the epidemic would have been orders of magnitude greater than has been the case to date (Chart 2.3). 

Chart 2.3
Modelled Scenarios of the Impact of Public Health Measures
For details, see text version.

Source: Public Health Agency of Canada.

As the provinces and territories begin to safely restart their economies, the federal government is investing in testing, tracing and health system capacity to mitigate and manage a possible resurgence. It is also investing in critical social services to ensure a fair and strong restart. Jurisdictions across Canada have released plans and frameworks for safe reopening of their economies that reflect their own specific experiences and needs. They have all been guided by public health considerations and follow a set of shared objectives and principles agreed upon by First Ministers in a joint statement on April 28, 2020.

Re-opening plans aim to manage the direct risk of COVID-19 while minimizing the unintended health, economic, and social harms of restrictive public health measures. They also aim to instill confidence in individuals and businesses as Canadians learn how to navigate their everyday lives while the virus is still circulating in Canada, even if at reduced levels. These plans are incremental, allowing certain activities to begin under safe conditions and modestly increasing the size of permitted gatherings. These plans are flexible, moving through phases based on careful monitoring of indicators such as the number of new cases and the rate of transmission (Table 2.1)

Table 2.1
Readiness Criteria and Indicators For Lifting Restrictive Public Health Measures
Criteria Indicators
1 COVID-19 transmission is controlled check mark Weekly number of cases
check mark Weekly number of deaths  
check mark Transmission rate
2 Sufficient public health capacity is in place to test, trace and isolate all cases check mark Number of people tested per week
check mark Per cent of positive tests per week  
check mark Proportion of cases acquired locally for which the source of exposure is unknown
3 Expanded health care capacity exists check mark Weekly number of ICU beds occupied by COVID-19 patients
check mark Weekly per cent of total ventilators used by COVID-19 patients
4 Supports are in place for vulnerable groups/communities and key populations check mark Percentage of all deaths that occur within long-term care facilities and retirement residences
5 Workplace preventive measures are established to reduce risk check mark Top-3 settings with highest occurrence of outbreaks
6 Avoiding risk of importation of cases check mark Number of cases who had travelled internationally, and number of cases who had a contact with an international traveler
Source: Recommendations from the FPT Special Advisory Committee on COVID-19.

Restarting the Canadian economy is a complex process. Health models show that when lockdown measures are lifted, other virus containment measures must be strictly followed in order to control the spread of the virus. Other measures, including physical distancing, increased capacity for testing and tracing, quarantine of contacts, and managing risk of transmission from international travel are more essential than ever. Data also show that some segments of the population have been particularly affected and may require additional support in order to ensure that every Canadian can participate in the economic recovery.

The government is committed to working with provinces and territories to ensure the appropriate supports are in place for all Canadians. As announced by the Prime Minister on June 5, the government will invest approximately $14 billion to support provinces and territories in the safe reopening of the country’s economies over the next 6 – 8 months. 

These investments will ensure that provinces and territories not only have the assistance they need to support their economic reopening, but it also ensures they are prepared for the possibility of a future resurgence of the virus. This funding will drive critical health outcomes such as achieving the government’s goal of having the capacity in place to perform 200,000 tests per day nationally. Federal support in these areas will lead to real outcomes that protect and support all Canadians. The government is continuing discussions with provincial and territorial counterparts on each of these areas, and will report publicly on progress towards a Safe Restart Agreement as it is made.

Table 2.2
Safe Restart Agreement
Priority Stream Objectives
1   Testing and contact tracing   check mark Increasing testing capacity to 200,000 tests per day
check mark Federal-Provincial and Territorial partnership on the procurement of testing supplies and equipment and data sharing on testing inventory
check mark Helping provinces and territories scale up contact tracing capacity
check mark Contribute to improved and modern pan-Canadian data management to share disaggregated data
2 Health care capacity check mark Helping provinces and territories prepare for a potential second wave of COVID-19
check mark Supporting people experiencing mental health and problematic substance use challenges
3 Personal Protective Equipment (PPE) check mark Ensuring health and non-health workers have access to a PPE procurement service, and access to an emergency PPE Reserve
4   Vulnerable populations   check mark Addressing immediate needs and gaps in supportive care (i.e. home care, long-term care, and palliative care)
check mark Providing health and social supports for other vulnerable groups
5   Child care   check mark Ensuring that a safe, sufficient and adequate supply of child care is available to support the gradual return to work of parents
    check mark Support the needs of staff, including through training, extra salary costs, and proper equipment (including PPE) to keep children and staff safe
6 Sick leave check mark Establishing a temporary income support program that provides workers with access to up to 10 days of paid sick leave related to COVID-19 who do not have access to other paid sick leave
7 Municipalities check mark Supporting municipalities through the fiscal impacts of COVID-19 including the increasing costs associated with a safe re-opening of the economy
Living with COVID-19: Phases of the Pandemic and the Economic Recovery

Broadly speaking, the pandemic and its economic impacts can be characterized in terms of three phases. These phases are for illustrative purposes and the exact shape of each phase in reality would depend on the magnitude of successive viral transmissions and our ability to contain them. For example, a scenario with a series of repetitive peaks of similar size would suggest a longer period of phase 2 while a scenario with a larger peak would mean a resurgence of the containment phase following a brief period of phase 2.  

Phase 1 – Containment Phase

Canada and many other countries went through a virus-containment phase in which comprehensive public health measures were taken to slow the spread of the virus. These measures had devastating impacts on the economy. By stepping in and providing rapid and substantial support to Canadians and businesses to help them get through the crisis, Canada’s COVID-19 Economic Response Plan has limited the severity of the decline in economic activity. 

Phase 2 – Controlled Safe Re-opening of the Economy While the Virus is Still Active

In this phase, the economy will start to recover lost ground as the most stringent public health restrictions are relaxed. Activity in sectors or regions where risk of viral transmission is lowest will be among those first to rebound. Meanwhile, for the most exposed sectors, such as entertainment and travel, a full recovery may take much longer as restrictions are likely to stay in place or demand could take longer to fully return. The Canadian economy is likely to require ongoing policy support. Continued vigilance will be needed to avoid setbacks.

Phase 3 – Rebuild and Recovery

Only once a widely available vaccine or effective treatment becomes available can the economy fully bounce back. However, once the spread of infection is no longer active, the economy is expected to enter a faster re-building and recovery phase. Even when the pandemic is over, lasting consequences may cast a long-term shadow over economic developments, for example via more indebted businesses and households, persistent unemployment and substantial structural changes in the economy that have been accelerated through the crisis. In the coming months and as needed the government will announce measures to support the recovery.

Figure 2.1
Phases of the Pandemic (Illustrative)
For details, see text version.
  • Text version

    This figure shows the progress of the pandemic and its economic impacts.  It shows the progression of GDP, the capacity of the health care system and the number of critical care patients over three phases in time. It is intended for illustrative purposes, where the exact shape of each line in reality would depend on the magnitude of successive viral transmissions and our ability to contain them.

    In Phase 1 – the containment phase, the line showing the number of critical care cases rises sharply before containment measures are put in place, at which point it levels off and begins to fall. At the same time, the GDP line falls sharply. In Phase 2 – the controlled safe re-opening of the economy while the virus is still active, the GDP line begins to rise as the economy reopens, while the line showing the number of cases fluctuates up and down periodically, but at a much lower level than in Phase 1. In Phase 3 – rebuild and recovery, the line showing cases falls to zero and the GDP line rises rapidly.

Economic Situation

With unprecedented speed and breadth, the COVID-19 pandemic has affected nearly all aspects of life. Public health containment measures led to large segments of the economy coming to an abrupt stop, with activity in some industries driven to near zero. Workplaces and schools were closed, travel restricted, and public gatherings banned, resulting in drastic impacts on many aspects of Canadians’ lives. Over March and April, 5.5 million Canadians either lost their jobs or saw their hours significantly scaled back – a stark indicator of the cost to the Canadian economy. The employment rate (the share of Canadians with a job) fell to its lowest level on record (Chart 2.4). The toll on the broader economy in 2020 is expected to be the largest and most sudden economic contraction since the Great Depression.

The Government of Canada’s rapid and substantial economic support measures have helped protect Canadians from a far worse economic outcome, prevented more layoffs, and have laid a foundation for a faster and stronger recovery. 

Chart 2.4
Employment Rate
For details, see text version.
Note: Last data point is May 2020.
Source: Statistics Canada.
  • Text version
    Month and year per cent
    Jan1976 57.2
    Feb1976 57.2
    Mar1976 57.3
    Apr1976 57.4
    May1976 57.2
    Jun1976 57.2
    Jul1976 57.1
    Aug1976 57.1
    Sep1976 57.1
    Oct1976 56.9
    Nov1976 57.1
    Dec1976 57.2
    Jan1977 57.1
    Feb1977 57.1
    Mar1977 56.9
    Apr1977 57
    May1977 57
    Jun1977 56.9
    Jul1977 56.8
    Aug1977 56.8
    Sep1977 56.7
    Oct1977 56.8
    Nov1977 56.8
    Dec1977 56.9
    Jan1978 56.8
    Feb1978 57
    Mar1978 57.1
    Apr1978 57.2
    May1978 57.2
    Jun1978 57.5
    Jul1978 57.6
    Aug1978 57.7
    Sep1978 57.7
    Oct1978 58
    Nov1978 58
    Dec1978 58.2
    Jan1979 58.4
    Feb1979 58.3
    Mar1979 58.5
    Apr1979 58.5
    May1979 58.7
    Jun1979 58.8
    Jul1979 59
    Aug1979 59.1
    Sep1979 59.1
    Oct1979 59.3
    Nov1979 59.4
    Dec1979 59.4
    Jan1980 59.4
    Feb1980 59.4
    Mar1980 59.3
    Apr1980 59.4
    May1980 59.1
    Jun1980 59.2
    Jul1980 59.1
    Aug1980 59.2
    Sep1980 59.5
    Oct1980 59.6
    Nov1980 59.8
    Dec1980 59.8
    Jan1981 60
    Feb1981 60.3
    Mar1981 60.2
    Apr1981 60.4
    May1981 60.4
    Jun1981 60.5
    Jul1981 60.2
    Aug1981 60.2
    Sep1981 60
    Oct1981 59.8
    Nov1981 59.7
    Dec1981 59.3
    Jan1982 59.1
    Feb1982 58.8
    Mar1982 58.6
    Apr1982 58.2
    May1982 57.8
    Jun1982 57.3
    Jul1982 57
    Aug1982 56.6
    Sep1982 56.4
    Oct1982 56.2
    Nov1982 56.1
    Dec1982 56
    Jan1983 56.1
    Feb1983 56.2
    Mar1983 56.4
    Apr1983 56.6
    May1983 56.7
    Jun1983 57
    Jul1983 57.2
    Aug1983 57.4
    Sep1983 57.6
    Oct1983 57.5
    Nov1983 57.4
    Dec1983 57.5
    Jan1984 57.3
    Feb1984 57.4
    Mar1984 57.4
    Apr1984 57.3
    May1984 57.5
    Jun1984 57.8
    Jul1984 57.9
    Aug1984 57.8
    Sep1984 57.9
    Oct1984 57.9
    Nov1984 57.8
    Dec1984 58
    Jan1985 58.2
    Feb1985 58.3
    Mar1985 58.3
    Apr1985 58.5
    May1985 58.6
    Jun1985 58.6
    Jul1985 58.8
    Aug1985 58.9
    Sep1985 58.9
    Oct1985 59
    Nov1985 59.3
    Dec1985 59.4
    Jan1986 59.6
    Feb1986 59.6
    Mar1986 59.6
    Apr1986 59.9
    May1986 59.7
    Jun1986 59.8
    Jul1986 59.8
    Aug1986 59.8
    Sep1986 59.7
    Oct1986 59.8
    Nov1986 59.9
    Dec1986 59.8
    Jan1987 59.8
    Feb1987 59.9
    Mar1987 60.1
    Apr1987 60.3
    May1987 60.5
    Jun1987 60.6
    Jul1987 60.6
    Aug1987 60.7
    Sep1987 60.9
    Oct1987 61.1
    Nov1987 61.2
    Dec1987 61.5
    Jan1988 61.5
    Feb1988 61.6
    Mar1988 61.7
    Apr1988 61.7
    May1988 61.6
    Jun1988 61.6
    Jul1988 61.6
    Aug1988 61.6
    Sep1988 61.6
    Oct1988 61.7
    Nov1988 61.8
    Dec1988 62
    Jan1989 62.2
    Feb1989 62.2
    Mar1989 62.4
    Apr1989 62.2
    May1989 62.1
    Jun1989 62.2
    Jul1989 62.1
    Aug1989 62.2
    Sep1989 62.2
    Oct1989 62.1
    Nov1989 62.1
    Dec1989 62.1
    Jan1990 62.2
    Feb1990 62.3
    Mar1990 62.2
    Apr1990 62.2
    May1990 61.9
    Jun1990 62
    Jul1990 61.8
    Aug1990 61.6
    Sep1990 61.5
    Oct1990 61.2
    Nov1990 60.8
    Dec1990 60.5
    Jan1991 60.3
    Feb1991 60
    Mar1991 59.7
    Apr1991 59.8
    May1991 59.9
    Jun1991 59.9
    Jul1991 59.7
    Aug1991 59.7
    Sep1991 59.5
    Oct1991 59.5
    Nov1991 59.3
    Dec1991 59.1
    Jan1992 59
    Feb1992 58.8
    Mar1992 58.6
    Apr1992 58.5
    May1992 58.5
    Jun1992 58.3
    Jul1992 58.3
    Aug1992 58.1
    Sep1992 58
    Oct1992 58
    Nov1992 57.9
    Dec1992 58
    Jan1993 58.1
    Feb1993 58
    Mar1993 58.1
    Apr1993 57.9
    May1993 57.8
    Jun1993 57.9
    Jul1993 57.9
    Aug1993 57.9
    Sep1993 58
    Oct1993 57.8
    Nov1993 58
    Dec1993 57.8
    Jan1994 57.8
    Feb1994 57.9
    Mar1994 58
    Apr1994 58
    May1994 58.3
    Jun1994 58.3
    Jul1994 58.5
    Aug1994 58.5
    Sep1994 58.7
    Oct1994 58.6
    Nov1994 59
    Dec1994 58.9
    Jan1995 58.9
    Feb1995 58.8
    Mar1995 58.9
    Apr1995 58.7
    May1995 58.6
    Jun1995 58.6
    Jul1995 58.6
    Aug1995 58.6
    Sep1995 58.7
    Oct1995 58.7
    Nov1995 58.5
    Dec1995 58.6
    Jan1996 58.6
    Feb1996 58.7
    Mar1996 58.5
    Apr1996 58.6
    May1996 58.6
    Jun1996 58.5
    Jul1996 58.5
    Aug1996 58.5
    Sep1996 58.3
    Oct1996 58.2
    Nov1996 58.3
    Dec1996 58.3
    Jan1997 58.6
    Feb1997 58.5
    Mar1997 58.6
    Apr1997 58.5
    May1997 58.8
    Jun1997 58.9
    Jul1997 59
    Aug1997 59.3
    Sep1997 59.3
    Oct1997 59.3
    Nov1997 59.3
    Dec1997 59.4
    Jan1998 59.3
    Feb1998 59.4
    Mar1998 59.5
    Apr1998 59.6
    May1998 59.6
    Jun1998 59.6
    Jul1998 59.8
    Aug1998 59.9
    Sep1998 60
    Oct1998 60
    Nov1998 60.1
    Dec1998 60.1
    Jan1999 60.3
    Feb1999 60.3
    Mar1999 60.3
    Apr1999 60.4
    May1999 60.5
    Jun1999 60.5
    Jul1999 60.7
    Aug1999 60.7
    Sep1999 60.7
    Oct1999 60.8
    Nov1999 60.9
    Dec1999 61.1
    Jan2000 61.2
    Feb2000 61.2
    Mar2000 61.3
    Apr2000 61.3
    May2000 61.3
    Jun2000 61.3
    Jul2000 61.2
    Aug2000 61.2
    Sep2000 61.3
    Oct2000 61.3
    Nov2000 61.4
    Dec2000 61.5
    Jan2001 61.4
    Feb2001 61.3
    Mar2001 61.2
    Apr2001 61.3
    May2001 61.3
    Jun2001 61.1
    Jul2001 61.1
    Aug2001 61.1
    Sep2001 61.1
    Oct2001 61.1
    Nov2001 61.1
    Dec2001 60.9
    Jan2002 61.1
    Feb2002 61.1
    Mar2002 61.3
    Apr2002 61.4
    May2002 61.6
    Jun2002 61.7
    Jul2002 61.8
    Aug2002 62.1
    Sep2002 62.1
    Oct2002 62
    Nov2002 62.1
    Dec2002 62.3
    Jan2003 62.3
    Feb2003 62.5
    Mar2003 62.4
    Apr2003 62.4
    May2003 62.2
    Jun2003 62.3
    Jul2003 62.4
    Aug2003 62.3
    Sep2003 62.4
    Oct2003 62.5
    Nov2003 62.6
    Dec2003 62.7
    Jan2004 62.6
    Feb2004 62.6
    Mar2004 62.6
    Apr2004 62.7
    May2004 62.8
    Jun2004 62.7
    Jul2004 62.7
    Aug2004 62.6
    Sep2004 62.7
    Oct2004 62.7
    Nov2004 62.7
    Dec2004 62.7
    Jan2005 62.6
    Feb2005 62.7
    Mar2005 62.6
    Apr2005 62.6
    May2005 62.5
    Jun2005 62.6
    Jul2005 62.6
    Aug2005 62.7
    Sep2005 62.5
    Oct2005 62.7
    Nov2005 62.7
    Dec2005 62.6
    Jan2006 62.5
    Feb2006 62.6
    Mar2006 62.7
    Apr2006 62.8
    May2006 63
    Jun2006 62.9
    Jul2006 62.8
    Aug2006 62.8
    Sep2006 62.8
    Oct2006 62.8
    Nov2006 62.9
    Dec2006 63
    Jan2007 63.2
    Feb2007 63.2
    Mar2007 63.3
    Apr2007 63.2
    May2007 63.2
    Jun2007 63.4
    Jul2007 63.4
    Aug2007 63.4
    Sep2007 63.5
    Oct2007 63.6
    Nov2007 63.6
    Dec2007 63.6
    Jan2008 63.6
    Feb2008 63.7
    Mar2008 63.6
    Apr2008 63.6
    May2008 63.5
    Jun2008 63.4
    Jul2008 63.3
    Aug2008 63.3
    Sep2008 63.4
    Oct2008 63.5
    Nov2008 63
    Dec2008 62.8
    Jan2009 62.3
    Feb2009 62
    Mar2009 61.9
    Apr2009 61.6
    May2009 61.5
    Jun2009 61.3
    Jul2009 61.3
    Aug2009 61.2
    Sep2009 61.2
    Oct2009 61.2
    Nov2009 61.4
    Dec2009 61.3
    Jan2010 61.4
    Feb2010 61.4
    Mar2010 61.4
    Apr2010 61.6
    May2010 61.6
    Jun2010 61.8
    Jul2010 61.6
    Aug2010 61.6
    Sep2010 61.4
    Oct2010 61.5
    Nov2010 61.5
    Dec2010 61.6
    Jan2011 61.8
    Feb2011 61.7
    Mar2011 61.7
    Apr2011 61.8
    May2011 61.7
    Jun2011 61.8
    Jul2011 61.8
    Aug2011 61.8
    Sep2011 61.7
    Oct2011 61.6
    Nov2011 61.5
    Dec2011 61.6
    Jan2012 61.4
    Feb2012 61.4
    Mar2012 61.6
    Apr2012 61.9
    May2012 61.7
    Jun2012 61.7
    Jul2012 61.6
    Aug2012 61.7
    Sep2012 61.7
    Oct2012 61.7
    Nov2012 61.8
    Dec2012 61.9
    Jan2013 61.9
    Feb2013 61.9
    Mar2013 61.7
    Apr2013 61.8
    May2013 61.8
    Jun2013 61.8
    Jul2013 61.7
    Aug2013 61.8
    Sep2013 61.7
    Oct2013 61.7
    Nov2013 61.6
    Dec2013 61.6
    Jan2014 61.5
    Feb2014 61.5
    Mar2014 61.5
    Apr2014 61.4
    May2014 61.3
    Jun2014 61.3
    Jul2014 61.4
    Aug2014 61.3
    Sep2014 61.3
    Oct2014 61.5
    Nov2014 61.4
    Dec2014 61.3
    Jan2015 61.3
    Feb2015 61.4
    Mar2015 61.4
    Apr2015 61.3
    May2015 61.4
    Jun2015 61.3
    Jul2015 61.4
    Aug2015 61.4
    Sep2015 61.3
    Oct2015 61.3
    Nov2015 61.2
    Dec2015 61.2
    Jan2016 61.1
    Feb2016 61.1
    Mar2016 61.1
    Apr2016 61.1
    May2016 61.1
    Jun2016 61.1
    Jul2016 60.9
    Aug2016 61
    Sep2016 61.2
    Oct2016 61.3
    Nov2016 61.2
    Dec2016 61.2
    Jan2017 61.5
    Feb2017 61.4
    Mar2017 61.4
    Apr2017 61.4
    May2017 61.5
    Jun2017 61.6
    Jul2017 61.6
    Aug2017 61.7
    Sep2017 61.6
    Oct2017 61.6
    Nov2017 61.8
    Dec2017 62
    Jan2018 61.6
    Feb2018 61.6
    Mar2018 61.7
    Apr2018 61.6
    May2018 61.5
    Jun2018 61.5
    Jul2018 61.6
    Aug2018 61.4
    Sep2018 61.5
    Oct2018 61.5
    Nov2018 61.8
    Dec2018 61.8
    Jan2019 61.9
    Feb2019 62
    Mar2019 61.9
    Apr2019 62.2
    May2019 62.1
    Jun2019 62
    Jul2019 61.9
    Aug2019 62
    Sep2019 62.1
    Oct2019 62
    Nov2019 61.7
    Dec2019 61.8
    Jan2020 61.8
    Feb2020 61.8
    Mar2020 58.5
    Apr2020 52.1
    May2020 52.9
Real GDP Growth Outlook
For details, see text version.
Sources: Statistics Canada; Department of Finance Canada May 2020 survey of private sector economists; Òscar Jordà, Moritz Schularick, and Alan M. Taylor. 2017. “Macrofinancial History and the New Business Cycle Facts.” in NBER Macroeconomics Annual 2016, volume 31, edited by Martin Eichenbaum and Jonathan A. Parker. Chicago: University of Chicago Press; Department of Finance Canada calculations.
  • Text version
    Year per cent
    1930 -3.3
    1931 -15.4
    1932 -7.1
    1933 -7.1
    1934 10.6
    1935 8.1
    1936 5.4
    1937 9.4
    1938 2.6
    1939 6.0
    1940 13.7
    1941 14.0
    1942 17.7
    1943 4.5
    1944 3.8
    1945 -3.1
    1946 -1.0
    1947 4.4
    1948 1.8
    1949 2.2
    1950 7.4
    1951 5.7
    1952 7.3
    1953 4.7
    1954 -0.7
    1955 9.3
    1956 8.1
    1957 2.9
    1958 1.8
    1959 4.1
    1960 3.1
    1961 3.0
    1962 7.4
    1963 5.4
    1964 6.6
    1965 6.3
    1966 6.7
    1967 3.1
    1968 5.0
    1969 5.0
    1970 3.0
    1971 4.0
    1972 5.5
    1973 6.8
    1974 3.3
    1975 1.5
    1976 5.9
    1977 3.4
    1978 3.7
    1979 3.7
    1980 2.2
    1981 3.5
    1982 -3.2
    1983 2.6
    1984 5.9
    1985 4.7
    1986 2.1
    1987 4.1
    1988 4.4
    1989 2.3
    1990 0.2
    1991 -2.1
    1992 0.9
    1993 2.7
    1994 4.5
    1995 2.7
    1996 1.6
    1997 4.3
    1998 3.9
    1999 5.2
    2000 5.2
    2001 1.8
    2002 3.0
    2003 1.8
    2004 3.1
    2005 3.2
    2006 2.6
    2007 2.1
    2008 1.0
    2009 -2.9
    2010 3.1
    2011 3.1
    2012 1.8
    2013 2.3
    2014 2.9
    2015 0.7
    2016 1.0
    2017 3.2
    2018 2.0
    2019 1.7
    2020 -6.8

The drop in real GDP is expected to be at its deepest in the second quarter of 2020. The average of private sector views suggest a 41 per cent decline on an annualized basis (Chart 2.5). Beyond the second quarter, views become increasingly divergent about the pace of recovery, illustrating the extreme uncertainty associated with the economic outlook.

Given the unprecedented nature of this crisis, and the unknowns surrounding the virus, any forecast should be considered with caution. In recent recessions, economies have tended to return to pre-crisis activity levels in a matter of quarters, depending on their depth, as businesses and consumers regain confidence, and the economy gains strength. However, the current recovery could be interrupted by a resurgence in uncontrolled community transmission of the virus within a region, or more broadly, and a need to reinstate some stringent public health measures. That is why the government is taking significant steps to prepare for and achieve a safe and gradual restart of the economy, while investing in testing, tracing and health system capacity to mitigate and manage a possible resurgence of the virus. The best economic policy is containing the spread of the virus.

A challenging environment for forecasting

Uncertainty is inherent in any forecast. However, in the current context, uncertainty is magnified to unprecedented levels. In addition to recovery being driven by public health outcomes, it may not follow historical patterns – crises can have a profound impact on economies that lead to permanent change. For example, the supply effects from COVID-19 will mean that the economy may not be able to produce the same level of goods and services, even if demand returns to pre-crisis levels. For example, fewer tables at a restaurant because of continued physical distancing may mean fewer jobs and lower activity levels even if a restaurant is able to adjust its operations by incorporating take-away service. Additionally, travel restrictions and fear of the virus may also lead to lower levels of immigration in the short-term, limiting workforce growth.

The demand effects also remain unclear as consumer and business behaviour in the wake of lockdown measures is difficult to predict. Some households may become concerned about the possibility of an uncertain future and respond by putting off major purchases, increasing their savings, or paying down debt, even if their overall income has been unaffected by the crisis. Others, who have lost jobs and income in this crisis will face challenging circumstances until it is clear what will happen in the long term. Some may simply have saved up during the lockdown phase and will return to their pre-crisis spending patterns once they are able to do so. Businesses could also remain reluctant to invest and hire until they manage to improve their balance sheets and regain confidence about demand prospects. These are important factors that weigh on any forecast and reinforce the important role of the extraordinary set of actions taken by the government to stabilize the economy.

Every forecast includes a potential range of error and uncertainty. As the pandemic has unfolded in recent months forecasters have experienced wide fluctuations in their own estimates as new data has been released and incorporated. Estimates of the rate of real GDP growth have shifted dramatically over the last two months; for example, at the time the Department of Finance Canada surveyed the group of private sector economists in mid-March, they were expecting virtually no growth in economic activity for 2020 as a whole. Two months later, in the May survey, they revised significantly down their forecasts to a decline of about 7 per cent for 2020.

In light of this uncertainty, the 2020 Economic and Fiscal Snapshot provides a range of estimates to help Canadians understand the different economic outcomes that may be possible as the coming months unfold. This includes both the range of variation in estimates received from the Department of Finance Canada May survey of private sector economists, as well as the Department’s own additional scenarios based on alternative paths of COVID-19 transmission and economic recovery.

Currently, the average of private sector forecasts, which factors in the economic impact of government’s decisive fiscal support, outlines a faster rebound in real GDP than in the past three recessions. While Canada has made progress in controlling the COVID-19 epidemic and ensuring sufficient health system capacity, there is a risk that certain sectors of the economy will face greater difficulties in the months ahead as they contend with new health and safety regulations, changing consumer preferences and an uncertain global recovery. This unevenness across sectors of the economy could lead to a more gradual recovery scenario and divergence between regions. Further, a possible uncontrolled resurgence of the virus and any consequent tightening of public health measures could also lead to an even slower recovery scenario. Overall, the recovery path is uncertain and fundamentally linked to the equally uncertain health outcomes.

Chart 2.5
Private Sector Real GDP Growth Outlook
For details, see text version.
Sources: Statistics Canada; Department of Finance Canada May 2020 survey of private sector economists.
  • Text version

    Per cent, quarter to quarter at annual rates

    2019
    Q4
    2020
    Q1
    2020
    Q2
    2020
    Q3
    2020
    Q4
    2021
    Q1
    2021
    Q2
    2021
    Q3
    2021
    Q4
    Lower 0.560227 -8.17282 -48.8557 -4.34116 7.659254 1.39844 1.779096 1.468113 1.654746
    Range 0 0 15.89642 76.81485 20.19068 11.40156 5.511033 4.031887 4.545254
    May 2020 private sector survey 0.560227 -8.17282 -40.645 32.24049 13.8011 6.124013 4.234416 3.179897 3.15682
Real GDP Level Outlook
For details, see text version.
Note: The past three recessions are 1981-1982, 1990-1991 and 2008-2009.
Sources: Statistics Canada; Department of Finance Canada September 2019 and May 2020 survey of private sector economists.
  • Text version

    Billions of chained 2012 dollars

    2019
    Q4
    2020
    Q1
    2020
    Q2
    2020
    Q3
    2020
    Q4
    2021
    Q1
    2021
    Q2
    2021
    Q3
    2021
    Q4
    Economic and Fiscal Update 2020 2,101 2,057 1,806 1,936 2,000 2,030 2,051 2,067 2,083
    Lower recession 2,101 2,077 2,030 2,008 2,017 2,007 1,989 2,022 2,048
    Range recession 0 16 48 51 13 33 76 54 43
    December 2019 EFU 2,101 2,110 2,118 2,127 2,136 2,146 2,156 2,166 2,175

Economic Developments and Prospects

COVID-19 has had unprecedented impacts across the Canadian economy

Public health measures have saved lives and protected the Canadian economy from worse outcomes in the long-term. However, they have also had large negative disruptions to the Canadian economy. The closure of non-essential businesses, schools and child care services, combined with stay-at-home policies and restrictions on gatherings and travel led to sudden and significant shutdowns across Canada from the middle of March.

While all Canadians have felt the economic impacts of the pandemic, rapid and substantial federal action has stabilized the Canadian economy and limited the potential severity of economic disruptions. The Plan has prevented higher unemployment levels by protecting jobs—in early May, about one in four private sector workers was covered by the Canada Emergency Wage Subsidy (CEWS). Income support measures have helped Canadians cover their bills and have prevented mortgage defaults. Furthermore, support measures to businesses have alleviated some of the severe cash-flow pressures, creating a bridge through the crisis and averting costly business failures. The Government of Canada’s actions have prevented longer term damage to the economy and better positioned Canada for recovery.

Businesses that rely on physical presence and interaction such as retail trade, travel, entertainment, hospitality and tourism, some of which employ a greater proportion of low-wage workers, visible minorities and women, will continue to feel the impacts acutely—businesses like restaurants, hotels, and sports and cultural venues (Chart 2.6). Additionally, Canadians put major purchases on hold, causing an unprecedented decline in sales of motor vehicles and homes. At the same time, non-discretionary spending surged in March, driven by massive purchases of basic necessities such as food, medication, and toiletries.

Chart 2.6
Peak-to-Trough Declines in High-Frequency Indicators
For details, see text version.

Note: Total dollar value of Interac Debit transactions. Interac Debit is separate from e-Transfer, automated banking machine cash withdrawals and other Interac products.
Sources: OpenTable; Hotel News Resource; Transitapp.com; FlightRadar; Baker Hughes; DesRosiers Automotive Consultants; Canadian Real Estate Association; Interact Corp.

  • Text version
    per cent
    Interac debit transactions -37
    Existing home sales -57
    Motor vehicle sales -75
    Oil rig drilling activity -79
    Air traffic -80
    Public transit usage -80
    Hotel occupancy -81
    Restaurant diners -100

Businesses drastically reduced investment and overall costs in response to large revenue losses and high uncertainty, but government supports like CEWS have enabled many businesses to keep their workers. Small and medium-sized enterprises (SMEs), particularly in the service sectors, have been most directly affected by lockdowns, having limited financial buffers to mitigate the impact. Imports and exports also declined, as the effects of the lockdown in China in the early days of the pandemic took a sudden toll on foreign demand and began to impact global supply chains.

Combined with demand and confidence weakening abruptly, this drove an 8.2 per cent decline in real GDP in the first quarter of 2020 (expressed at annual rates), despite the restrictive public health containment measures only being in place for half of one month (Chart 2.7). The full impact of the containment measures is expected to result in a much larger decline in real GDP in the second quarter, with the level of activity down by about 20 per cent at peak of the lockdown in April. With activities gradually resuming in May, output across several industrial sectors increased slightly in the month but remains well below pre-pandemic levels.

Key labour market metrics underscore the economic impacts of Canadians’ efforts to contain the spread of COVID-19. A combination of job losses and sharp reductions in hours worked affected roughly 5.5 million Canadians from February to April – about 30 per cent of the workforce. The most significant impacts were concentrated in the service sector, particularly in areas affected by closure of non-essential activities, and where physical distancing and alternative work arrangements are more difficult or not possible, such as eat-in restaurants. Women have experienced slightly larger reduction in hours worked and lost their jobs earlier than men, reflecting their greater share of employment in some of the hardest-hit service industries. Differentiated sectoral impacts has also meant that low-wage workers, youth and very recent immigrants faced more significant job losses and reduced hours worked during the COVID-19 pandemic.

Chart 2.7
Evolution of Monthly Real GDP
For details, see text version.
Note: The reading for May 2020 is a preliminary estimate.
Source: Statistics Canada.
  • Text version
    Year billions of chained 2012 dollars
    Jan2005 1,515
    Feb2005 1,516
    Mar2005 1,511
    Apr2005 1,522
    May2005 1,529
    Jun2005 1,533
    Jul2005 1,537
    Aug2005 1,543
    Sep2005 1,544
    Oct2005 1,549
    Nov2005 1,558
    Dec2005 1,566
    Jan2006 1,570
    Feb2006 1,574
    Mar2006 1,577
    Apr2006 1,577
    May2006 1,578
    Jun2006 1,575
    Jul2006 1,578
    Aug2006 1,579
    Sep2006 1,577
    Oct2006 1,580
    Nov2006 1,583
    Dec2006 1,593
    Jan2007 1,590
    Feb2007 1,598
    Mar2007 1,601
    Apr2007 1,603
    May2007 1,610
    Jun2007 1,615
    Jul2007 1,615
    Aug2007 1,619
    Sep2007 1,617
    Oct2007 1,618
    Nov2007 1,619
    Dec2007 1,613
    Jan2008 1,620
    Feb2008 1,617
    Mar2008 1,620
    Apr2008 1,623
    May2008 1,623
    Jun2008 1,626
    Jul2008 1,633
    Aug2008 1,632
    Sep2008 1,632
    Oct2008 1,631
    Nov2008 1,614
    Dec2008 1,592
    Jan2009 1,584
    Feb2009 1,576
    Mar2009 1,563
    Apr2009 1,558
    May2009 1,557
    Jun2009 1,559
    Jul2009 1,561
    Aug2009 1,560
    Sep2009 1,572
    Oct2009 1,574
    Nov2009 1,583
    Dec2009 1,588
    Jan2010 1,598
    Feb2010 1,606
    Mar2010 1,614
    Apr2010 1,612
    May2010 1,619
    Jun2010 1,623
    Jul2010 1,625
    Aug2010 1,630
    Sep2010 1,630
    Oct2010 1,638
    Nov2010 1,646
    Dec2010 1,657
    Jan2011 1,663
    Feb2011 1,660
    Mar2011 1,665
    Apr2011 1,665
    May2011 1,662
    Jun2011 1,669
    Jul2011 1,680
    Aug2011 1,689
    Sep2011 1,694
    Oct2011 1,694
    Nov2011 1,696
    Dec2011 1,704
    Jan2012 1,702
    Feb2012 1,698
    Mar2012 1,702
    Apr2012 1,708
    May2012 1,711
    Jun2012 1,712
    Jul2012 1,715
    Aug2012 1,713
    Sep2012 1,713
    Oct2012 1,712
    Nov2012 1,720
    Dec2012 1,720
    Jan2013 1,730
    Feb2013 1,735
    Mar2013 1,741
    Apr2013 1,744
    May2013 1,749
    Jun2013 1,742
    Jul2013 1,752
    Aug2013 1,760
    Sep2013 1,766
    Oct2013 1,776
    Nov2013 1,780
    Dec2013 1,773
    Jan2014 1,773
    Feb2014 1,782
    Mar2014 1,787
    Apr2014 1,791
    May2014 1,802
    Jun2014 1,810
    Jul2014 1,813
    Aug2014 1,809
    Sep2014 1,816
    Oct2014 1,822
    Nov2014 1,823
    Dec2014 1,826
    Jan2015 1,818
    Feb2015 1,816
    Mar2015 1,814
    Apr2015 1,814
    May2015 1,813
    Jun2015 1,818
    Jul2015 1,822
    Aug2015 1,826
    Sep2015 1,819
    Oct2015 1,820
    Nov2015 1,825
    Dec2015 1,827
    Jan2016 1,838
    Feb2016 1,834
    Mar2016 1,828
    Apr2016 1,829
    May2016 1,819
    Jun2016 1,828
    Jul2016 1,839
    Aug2016 1,842
    Sep2016 1,849
    Oct2016 1,847
    Nov2016 1,852
    Dec2016 1,861
    Jan2017 1,869
    Feb2017 1,875
    Mar2017 1,883
    Apr2017 1,890
    May2017 1,897
    Jun2017 1,901
    Jul2017 1,903
    Aug2017 1,901
    Sep2017 1,905
    Oct2017 1,907
    Nov2017 1,917
    Dec2017 1,923
    Jan2018 1,921
    Feb2018 1,926
    Mar2018 1,931
    Apr2018 1,930
    May2018 1,939
    Jun2018 1,940
    Jul2018 1,945
    Aug2018 1,947
    Sep2018 1,948
    Oct2018 1,952
    Nov2018 1,947
    Dec2018 1,948
    Jan2019 1,952
    Feb2019 1,948
    Mar2019 1,961
    Apr2019 1,967
    May2019 1,972
    Jun2019 1,977
    Jul2019 1,977
    Aug2019 1,980
    Sep2019 1,981
    Oct2019 1,981
    Nov2019 1,982
    Dec2019 1,989
    Jan2020 1,991
    Feb2020 1,995
    Mar2020 1,846
    Apr2020 1,631
    May2020 1,680
Workers Substantially Affected by COVID-19, From Pre-COVID to Maximum Impact
For details, see text version.
Notes: The majority of workers who remained employed but saw their hours significantly scaled back (by more than 50 per cent) worked zero hours. Includes absences due to childcare responsibilities, other caregiving duties, sick leave/quarantine leave. Absences also include some occupations which may not have lost wages, e.g. teachers.
Sources: Statistics Canada, Department of Finance Canada calculations.
  • Text version

    February to April Impact

    million workers
    Lost their job and unemployed 1.3
    Employed but saw their hours significantly scaled back 2.5
    Lost their job and left the labour force 1.8

The unemployment rate rose to 13.7 per cent in May, its highest level on record, from a pre-crisis historical low of 5.5 per cent in January. Because many laid off individuals were not available or searching for work, given the circumstances, they are not among the officially unemployed looking for jobs and therefore not counted in the labour force. This contributed to the labour force participation rate dropping to its lowest level on record at the worst of the crisis. Millions of Canadian workers have been able to stay employed or return to work because of support received through the CEWS. This has prevented unemployment from rising higher and ensured that Canadians are able to stay connected to their jobs even if they are on furlough.  

After two months, the labour market started showing some encouraging signs in May as the gradual re-opening of the economy began to take effect. The number of Canadians who worked less than half their usual hours dropped by close to 300,000 and about 290,000 laid-off workers were able to find a job. Moreover, job postings have been increasing since reaching a trough in mid-April, particularly in provinces less affected by the pandemic, although they remain at low levels compared to previous years (Chart 2.8).

Chart 2.8
New Job Postings, by Province, 2020
For details, see text version.
Notes: New postings defined as those on Indeed 7 days or less. Last data point is June 20, 2020.
Source: Indeed.com
  • Text version
    Quebec Ontario British Columbia Atlantic Prairies
    Feb01 100 100 100 100 100
    Feb02 100.3713 100.0982 100.0148 100.9109 99.90289
    Feb03 100.8239 100.1897 100.1136 102.0243 99.80752
    Feb04 101.214 100.2452 100.3752 104.3233 100.0017
    Feb05 101.8976 100.4153 100.3868 106.832 100.0382
    Feb06 103.2731 101.785 100.7258 112.5361 100.8324
    Feb07 104.506 103.4196 101.2195 118.6018 101.9387
    Feb08 106.0784 105.319 101.891 124.3566 104.2676
    Feb09 107.7556 107.1487 102.4687 130.1186 106.3277
    Feb10 109.3444 108.9899 103.0167 135.8372 108.4849
    Feb11 110.727 110.8806 103.8923 140.2906 110.7566
    Feb12 111.8786 112.8037 105.3126 144.5344 113.3144
    Feb13 110.9062 112.4522 105.5068 142.5752 114.2993
    Feb14 110.0717 111.3737 105.2995 139.8135 114.5595
    Feb15 108.4498 109.7622 104.5045 136.43 112.7612
    Feb16 106.8433 108.0978 103.7277 133.1189 110.9716
    Feb17 105.2816 106.3677 102.9657 129.7137 108.8751
    Feb18 103.6951 102.4455 99.8239 124.6313 104.715
    Feb19 102.3479 98.03551 96.01224 118.4644 99.75029
    Feb20 102.3939 95.15448 93.01196 114.7918 95.52257
    Feb21 101.953 92.92445 90.55973 111.6252 91.90352
    Feb22 101.8623 91.16996 88.7724 108.784 89.51914
    Feb23 101.7656 89.62614 87.1513 106.1596 87.27522
    Feb24 101.689 88.23677 85.65692 103.6365 85.37812
    Feb25 102.0132 90.81432 88.07459 105.2487 87.11048
    Feb26 101.8658 94.2752 91.08474 108.0393 90.08618
    Feb27 101.2329 96.90627 94.01261 110.7287 93.06883
    Feb28 100.8757 99.22098 96.24595 113.0639 95.65609
    Feb29 100.798 101.302 98.05303 116.0136 97.96938
    Mar01 100.7143 103.1716 99.61653 118.6813 100.2965
    Mar02 100.5646 104.9993 101.0895 121.6093 102.6774
    Mar03 100.1179 105.0142 100.6089 122.354 103.5185
    Mar04 100.2935 104.3713 99.95392 122.4913 103.9034
    Mar05 101.0643 104.2216 99.40916 123.6047 104.3873
    Mar06 101.5476 104.0753 99.78769 125.0868 105.074
    Mar07 101.5193 104.1661 100.3933 125.4338 106.0069
    Mar08 101.4993 104.4093 101.1027 125.8531 106.9364
    Mar09 101.5759 104.5021 101.7314 125.7663 107.4479
    Mar10 101.6101 104.3375 102.0704 125.4265 107.4271
    Mar11 101.4804 104.3422 102.2514 125.5061 107.3023
    Mar12 100.6424 104.0516 102.2646 124.3349 106.8739
    Mar13 99.97407 103.5903 101.2442 122.8022 105.993
    Mar14 99.09361 102.4475 99.60995 121.1611 104.2208
    Mar15 98.12475 101.1563 97.86705 119.2958 102.2803
    Mar16 96.99206 99.895 96.0501 117.5029 100.4249
    Mar17 94.96947 97.43058 93.48595 114.6689 97.41967
    Mar18 91.28733 93.26722 89.38958 109.4202 92.75322
    Mar19 86.60451 87.83574 83.95681 103.1883 86.72898
    Mar20 80.87268 81.37934 77.95625 95.78514 80.04231
    Mar21 74.65524 74.40879 71.35827 88.54829 73.31056
    Mar22 68.21739 67.33121 64.6204 81.45604 66.42621
    Mar23 61.81726 60.18656 57.92038 74.45055 59.66844
    Mar24 55.88506 54.26938 52.39381 69.06449 54.4731
    Mar25 50.92525 49.75918 48.42415 65.55813 50.81069
    Mar26 46.72804 46.47171 45.72012 63.33864 48.57197
    Mar27 43.36531 44.43406 44.06939 61.68305 47.19857
    Mar28 40.84062 43.35088 43.68263 59.86842 46.33326
    Mar29 38.50923 42.41741 43.35018 57.94534 45.6743
    Mar30 36.23088 41.62755 43.08191 56.14517 45.02055
    Mar31 34.38981 40.82143 42.33143 53.20272 44.0009
    Apr01 33.18639 40.25037 41.39497 50.24581 42.90842
    Apr02 32.77976 39.93876 40.58524 47.11538 42.09687
    Apr03 32.92002 39.57364 39.86768 45.27183 41.51074
    Apr04 33.16871 39.18277 38.94274 44.47658 41.20034
    Apr05 33.45631 38.77633 38.17745 43.81145 40.92635
    Apr06 33.81108 38.34617 37.42861 42.9439 40.59861
    Apr07 34.34855 38.01627 36.95463 42.71255 40.38358
    Apr08 34.82002 37.74192 36.71269 42.64748 40.46855
    Apr09 34.91903 37.31786 36.34568 43.04511 40.09052
    Apr10 34.6385 37.01574 35.91284 42.82099 39.6674
    Apr11 34.06096 36.29565 35.00436 41.41845 38.82983
    Apr12 33.45749 35.52408 34.01524 39.90023 37.69574
    Apr13 32.722 34.74438 32.99649 38.51215 36.58071
    Apr14 31.61995 34.03513 31.94977 37.29757 35.50731
    Apr15 30.55209 33.37398 30.98534 36.19867 34.08015
    Apr16 30.14427 32.97295 30.40931 35.3022 33.26859
    Apr17 30.07355 32.46896 29.86949 34.57924 32.55241
    Apr18 30.74774 33.13417 30.45868 35.09254 32.72929
    Apr19 31.61288 34.05207 31.22398 35.92394 33.46455
    Apr20 32.63478 35.04176 32.03864 36.84211 34.26223
    Apr21 34.5006 36.25026 33.41453 38.68566 35.50037
    Apr22 36.53026 37.45131 34.82003 40.9919 37.41134
    Apr23 37.81971 38.56768 36.02969 43.3343 38.96509
    Apr24 39.16103 39.80463 37.39241 46.16831 40.41653
    Apr25 40.46109 40.48882 38.82589 49.16859 41.51768
    Apr26 41.59732 41.08833 40.40421 51.99537 42.43675
    Apr27 42.6204 41.63093 41.99075 54.72094 43.44079
    Apr28 42.98461 41.90393 43.15762 56.07287 44.2246
    Apr29 43.10719 42.08412 44.25701 57.19346 44.52286
    Apr30 43.76134 42.11935 45.22309 58.00318 45.05696
    May01 44.26463 42.13899 46.13815 57.93811 46.04193
    May02 44.13852 42.16812 45.98015 57.80798 47.29048
    May03 44.05247 42.16473 45.54237 57.85859 48.59972
    May04 44.05837 42.17218 45.11117 58.27068 49.9263
    May05 44.46029 42.44315 44.90545 59.83227 51.42629
    May06 45.26414 42.95595 44.91203 61.28543 53.41356
    May07 46.05502 43.81016 45.32677 63.38924 55.65401
    May08 46.92251 44.86557 46.01307 66.09312 57.51643
    May09 48.45831 45.94875 47.55518 68.29092 59.06324
    May10 49.89864 46.86325 49.01664 70.27183 60.36555
    May11 51.28828 47.76759 50.47152 71.631 61.36092
    May12 52.66142 48.58387 51.89513 72.91064 62.21062
    May13 53.68567 49.25654 53.08175 74.71805 62.64241
    May14 54.14182 49.5756 54.13012 75.62898 62.20715
    May15 54.5461 49.70634 55.00732 76.2218 61.73028
    May16 54.59442 49.6806 55.26736 76.59051 61.06265
    May17 54.80894 49.75173 55.76274 76.73511 60.50081
    May18 54.97984 49.9685 56.25154 77.16165 60.20774
    May19 53.84362 49.21657 55.51258 75.09398 58.7355
    May20 52.90776 48.63671 55.07316 72.74436 57.28926
    May21 52.85118 48.49039 54.69956 70.85743 56.68753
    May22 53.09163 48.50191 54.26507 69.09341 56.34765
    May23 53.34268 48.51613 54.29634 67.59688 56.19332
    May24 53.45584 48.60149 54.2733 66.4546 56.11702
    May25 53.65385 48.44839 54.32432 65.34847 55.87424
    May26 56.09722 50.18527 56.61855 68.00896 57.76961
    May27 58.62191 51.74061 58.63959 69.78022 59.84185
    May28 60.47948 53.04327 60.36767 72.45518 61.69907
    May29 61.95752 54.28225 61.80445 75.68681 63.20773
    May30 61.78662 54.22738 61.28767 77.0026 62.94414
    May31 61.75243 54.17793 60.74785 78.39792 62.55051
    Jun01 61.78897 54.2897 60.09941 79.9812 62.34241
    Jun02 60.9757 53.69087 58.40753 80.34268 61.843
    Jun03 59.78171 53.24446 56.90492 82.09225 61.1615
    Jun04 58.77985 52.8292 55.40396 82.46819 60.41757
    Jun05 58.00429 52.21141 54.37369 82.40312 60.25803
    Jun06 60.84015 54.49496 56.73047 86.26374 63.87882
    Jun07 63.52514 56.82864 59.15966 89.92192 67.61406
    Jun08 66.00387 59.07425 61.62341 93.24754 71.18283
    Jun09 68.00877 60.87819 63.81396 95.38028 73.50304
    Jun10 70.24823 62.52159 65.83006 96.26952 75.96025
    Jun11 72.41461 64.29709 68.18518 97.61423 78.32729
    Jun12 74.27689 66.41806 70.31319 99.30596 80.04231
    Jun13 74.11188 67.12527 70.75756 99.38548 79.51862
    Jun14 74.05884 67.68346 71.04886 99.26981 78.8822
    Jun15 74.11188 68.34258 71.27434 99.28427 78.30475
    Jun16 74.50791 69.43592 71.8372 99.86264 78.28221
    Jun17 74.67056 70.74197 72.24206 100.4338 78.22498
    Jun18 74.9888 71.81499 72.23877 100.5784 78.07585
    Jun19 75.66418 72.75862 72.20915 99.97108 78.33943
    Jun20 76.31244 73.53764 72.25852 98.74928 79.01226
New Job Postings, by Month, Canada
For details, see text version.
Note: New postings defined as those on Indeed 7 days or less. Last data point is June 20, 2020.
Source: Indeed.com
  • Text version
    2019 2020
    Feb01 109.8599 100
    Feb02 108.3942 100.1627
    Feb03 106.8136 100.3659
    Feb04 105.3036 100.6575
    Feb05 104.2009 101.0104
    Feb06 103.7765 102.2951
    Feb07 103.5136 103.7391
    Feb08 103.5326 105.5593
    Feb09 104.0354 107.3116
    Feb10 104.6777 109.0533
    Feb11 105.3311 110.8034
    Feb12 105.6731 112.6331
    Feb13 105.3642 112.3669
    Feb14 104.889 111.6372
    Feb15 104.1979 110.087
    Feb16 103.7809 108.5333
    Feb17 103.3381 106.9155
    Feb18 102.8615 103.5967
    Feb19 101.138 99.86471
    Feb20 99.64492 97.41747
    Feb21 98.43597 95.30683
    Feb22 97.46066 93.76915
    Feb23 96.25878 92.36922
    Feb24 95.146 91.1168
    Feb25 94.12695 92.95223
    Feb26 95.87707 95.36198
    Feb27 98.07437 97.30581
    Feb28 100.2575 99.00785
    Feb29 102.2495 100.6148
    Mar01 104.2509 102.0957
    Mar02 106.1963 103.5462
    Mar03 108.0804 103.5456
    Mar04 108.7093 103.3103
    Mar05 109.106 103.4807
    Mar06 109.7162 103.7899
    Mar07 110.6996 104.0922
    Mar08 111.8406 104.4652
    Mar09 112.8934 104.7002
    Mar10 113.9195 104.6826
    Mar11 114.7057 104.6652
    Mar12 115.6335 104.255
    Mar13 116.4588 103.563
    Mar14 116.8672 102.2965
    Mar15 116.9794 100.9003
    Mar16 117.2608 99.483
    Mar17 117.5944 97.03169
    Mar18 118.1174 92.89817
    Mar19 118.1571 87.52364
    Mar20 117.401 81.21726
    Mar21 116.4781 74.48708
    Mar22 115.7327 67.6197
    Mar23 114.9342 60.764
    Mar24 114.2485 55.00723
    Mar25 113.5688 50.61887
    Mar26 113.1762 47.39682
    Mar27 113.5109 45.22886
    Mar28 114.2414 43.93487
    Mar29 114.6522 42.78596
    Mar30 115.1619 41.72535
    Mar31 115.4566 40.57318
    Apr01 115.6688 39.61906
    Apr02 115.768 39.02409
    Apr03 115.8696 38.62881
    Apr04 116.0185 38.29682
    Apr05 116.8207 38.0026
    Apr06 117.3116 37.69724
    Apr07 118.0128 37.5739
    Apr08 118.6385 37.55433
    Apr09 119.3008 37.29923
    Apr10 119.5945 36.97431
    Apr11 119.5671 36.21715
    Apr12 119.1291 35.36899
    Apr13 118.8708 34.49338
    Apr14 118.2943 33.56045
    Apr15 117.8968 32.60959
    Apr16 117.5091 32.08744
    Apr17 117.6107 31.61798
    Apr18 117.9878 32.18062
    Apr19 116.6324 33.02009
    Apr20 114.8777 33.9427
    Apr21 113.1982 35.35296
    Apr22 110.3657 36.93709
    Apr23 107.3496 38.23026
    Apr24 103.7616 39.6139
    Apr25 99.9022 40.72287
    Apr26 99.53897 41.74926
    Apr27 99.94349 42.73951
    Apr28 100.508 43.3141
    Apr29 102.8879 43.68982
    Apr30 105.6584 44.13401
    May01 108.9489 44.56951
    May02 112.4921 44.71838
    May03 114.3403 44.83113
    May04 115.8152 44.98652
    May05 117.2353 45.4481
    May06 117.8881 46.21422
    May07 118.5276 47.24359
    May08 118.7849 48.37783
    May09 118.5939 49.75278
    May10 118.4133 50.97884
    May11 118.1356 52.11634
    May12 117.802 53.18837
    May13 117.6387 54.03355
    May14 117.1008 54.41851
    May15 116.7256 54.67035
    May16 116.8123 54.6459
    May17 116.6563 54.74479
    May18 116.5599 54.94501
    May19 116.4931 53.94743
    May20 113.9486 53.1142
    May21 111.0566 52.82106
    May22 108.2619 52.69311
    May23 105.3221 52.66838
    May24 102.7148 52.66078
    May25 100.1793 52.56297
    May26 97.78993 54.61629
    May27 99.88535 56.56772
    May28 102.9873 58.20999
    May29 105.8782 59.66725
    May30 108.6197 59.54527
    May31 111.1435 59.43253
    Jun01 113.656 59.43226
    Jun02 116.0079 58.68325
    Jun03 115.9003 57.9625
    Jun04 115.1295 57.22925
    Jun05 114.4085 56.60875
    Jun06 113.9024 59.31761
    Jun07 113.59 62.03136
    Jun08 113.1824 64.60439
    Jun09 112.7809 66.5906
    Jun10 112.6111 68.48743
    Jun11 112.6068 70.49211
    Jun12 112.6448 72.44001
    Jun13 112.6081 72.65002
    Jun14 110.5171 72.78097
    Jun15 108.3187 72.99151
    Jun16 106.1336 73.63049
    Jun17 103.9434 74.29066
    Jun18 101.9226 74.78266
    Jun19 99.80086 75.34041
    Jun20 97.57639 75.87588

However, the employment and labour force participation rates remain far below their pre-crisis level and there remains considerable ground to recover for many Canadians who are working less than their regular hours. Job losses remain acute in many lower-wage industries (Chart 2.9) and fewer women were able to get back to work as the economy began to recover in May. In particular, the working hours of mothers of young children fell proportionally more than for fathers and mothers of older kids, reflecting the unpaid care work in the home that is disproportionately carried out by women. This underscores the important role of gender equality and child care in helping Canadians return to work. 

Chart 2.9
Share of Workers Laid-Off Since February by Industry
For details, see text version.

Note: Estimates are not seasonally adjusted.
Sources: Statistics Canada; Department of Finance Canada calculations.

  • Text version
    February to April April to May Net Impact
    Accomodation and Food Services -50 3.408167 -46.6162
    Information, Culture and Recreation -23.8474 -0.84757 -24.695
    Other Services -22.7245 1.465292 -21.2592
    Wholesale & Retail Trade -20.2062 3.713601 -16.4926
    Business & Building Support -12.3934 -3.94754 -16.341
    Construction -21.1989 4.947305 -16.2516
    Transportation & Warehousing -13.8612 -2.3715 -16.2327
    All Industries -15.6571 1.509167 -14.1479
    Manufacturing -17.3413 4.548068 -12.7932
    Educational Services -11.5329 1.609411 -9.9235
    Health Care and Social Assistance -9.10247 0.135087 -8.96738
    Agriculture -7.29685 -0.76285 -8.0597
    Professional Services -4.74758 -0.82539 -5.57297
    Utilities -3.81844 0.216138 -3.60231
    Natural Resources -7.40502 4.539601 -2.86542
    Public Administration -2.48294 -0.30666 -2.78959
    Finance & Real Estate -3.62027 1.279163 -2.34111

Overall, more than 8 million Canadians had applied to the Canada Emergency Response Benefit (CERB). New weekly claims peaked during early April, around the same time job postings were at their lowest across all regions of Canada. Encouragingly, continuing CERB claims have since been declining while opportunities for job seekers have started to improve. In fact, it is estimated that close to 1.2 million Canadians have ceased requesting income support via the CERB as of the end of May. In addition, the CEWS is easing cash-flow pressures and providing support for employers to keep more Canadians at work, helping to prevent further job losses and ensuring businesses and workers can more easily resume operations as the economy reopens (Chart 2.10).

Chart 2.10
Share of Private Sector Workers Covered by CEWS Applications in May, by Industry
For details, see text version.

Note: Private sector employment includes private sector employees and incorporated self-employed. To avoid double counting, only claims from the second CEWS period (April 12 to May 9) are included. Estimates are not seasonally adjusted.
Sources: Canada Revenue Agency; Statistics Canada; Department of Finance Canada calculations.

  • Text version

    This chart shows the share of private sector workers, including incorporated self-employed, that were covered by Canada Emergency Wage Subsidy (CEWS) applications in May, broken down by industry. It shows that across all industries, nearly one quarter of private sector employees were covered by CEWS applications in May.

    Industries with a high share of private sector workers covered by CEWS include accommodation and food services, wholesale trade, and education services. Accommodation and food services in particular has about 44% of private sector employees covered by CEWS. Industries with a lower share of private sector workers covered by CEWS include agriculture, forestry, fishing & hunting, utilities, and finance & insurance.

The services sector is the epicenter of the downturn and layoffs, led by acute drops in output and employment in air travel and hospitality industries. Accommodation and food services have experienced particularly severe job losses. This is important from an equity perspective, given that women and Canadians identifying as visible minorities are represented in greater numbers in this sector than among the population as a whole. However, losses have also been severe in the goods sector as manufacturing and construction industries have had to deal with severe drops in both domestic and foreign demand as well as some government-ordered restrictions on activity. Canadian businesses that rely on parts or other supplies from abroad or are suppliers to global partners themselves have seen disruptions to production as global output fell during the spring before stabilizing at low levels more recently (Chart 2.11). Meanwhile, weekly data from Canadian railways reveal dramatic declines in shipments across a number of major goods through mid-May, including automobiles, where North American production was shuttered for two months and sales collapsed.

Chart 2.11
Manufacturing Activity Index
For details, see text version.
Notes: A reading above/below 50 indicates expansion/contraction in business activity over the past month as reported by surveyed purchasing managers. Last data point is June 2020.
Source: IHS Markit.
  • Text version

    This chart shows the manufacturing activity index for Canada, the U.S., the euro area and China. It shows that the four indices have been gradually trending down from 2018 to the beginning of 2020. China's index sank in February 2020 well below 50 and then bounced back to above 50 the next month. For the other three indices, they fell well below 50 in April 2020 and they rebounded to slightly below 50 in June 2020."

CN Rail Carloadings
For details, see text version.
Note: Last data point is the week beginning June 21, 2020.
Source: CN Weekly Metrics.
  • Text version
      All shipments (left scale) Automotive (right scale) Mining (right scale)
    Mar15 0 0 0
    Mar22 -5.9015 -63.4741 3.829623
    Mar29 -5.88644 -84.1056 -10.1121
    Apr05 -5.81138 -88.174 -5.24824
    Apr12 -7.34985 -92.1032 -9.07082
    Apr19 -7.78204 -91.795 -14.5834
    Apr26 -10.1666 -89.0407 -19.9226
    May03 -10.6002 -91.352 -31.6704
    May10 -13.7108 -91.5061 -35.3793
    May17 -14.3711 -81.4906 -25.9879
    May24 -10.3577 -73.5038 -29.415
    May31 -10.2103 -56.405 -52.9756
    Jun07 -7.47471 -46.5802 -49.4047
    Jun14 -5.4238 -36.8029 -22.4017
    Jun21 -7.87428 -35.7138 -18.5934

Canada’s oil-producing regions are coping with the additional challenge of drastically lower global crude oil prices, driven by sharply lower demand prospects due to the pandemic and higher supplies from OPEC+ producers, resulting in a rapid build-up in global oil inventories. In April, these conditions contributed to record lows for many benchmarks, with some prices even turning briefly negative (Chart 2.12). Canadian producers, facing lasting oversupply conditions, have responded with significant cuts in production, and reductions in investment and hiring. In particular, employment in mining and oil and gas support services fell by over 15 per cent between February and May. Oil prices, although showing some signs of improvement in recent weeks, remain well below pre-crisis levels.

In April, the Government of Canada announced $1.72 billion for the governments of Alberta, Saskatchewan, and British Columbia and for the Alberta Orphan Well Association, to clean up orphan and inactive oil and gas wells. This will help maintain approximately 5,300 jobs in Alberta alone. In addition, the $750-million Emissions Reduction Fund will provide conventional and offshore oil and gas companies with repayable contributions to support investment to reduce greenhouse gas emissions and conduct research and development.

Chart 2.12
Crude Oil Prices
For details, see text version.
Notes: The U.S. West Texas Intermediate (WTI) benchmark and Western Canada Select (WCS), the benchmark for Western Canadian heavy crude oil. Last data point is June 30, 2020.
Source: Bloomberg.
  • Text version

    This chart shows that WTI and WCS crude oil prices started year 2020 at around US$60 and US$40, respectively. They followed a declining trend until mid-April, with WTI prices even dipping in negative territory. While prices remain below beginning of year levels, they have since rebounded to around US$40 and US$30, respectively as of end of June.

Canadian 2020 Crude Oil Production Outlook
For details, see text version.
Sources: International Energy Agency, Oil Market Report – June 2020 issue; Department of Finance Canada calculations.
  • Text version
    Mar2020 Apr2020 May2020 Jun2020 Jul2020 Aug2020 Sep2020 Oct2020 Nov2020 Dec2020
    2019 production (same month) 5.58 5.68 5.4 5.52 5.55 5.6 5.35 5.45 5.7 5.8
    January 2020 forecast 5.74 5.61 5.61 5.61 5.64 5.64 5.64 5.69 5.69 5.69
    June 2020 forecast 5.68 5.15 4.62 4.59 4.82 4.95 4.8 4.97 5.22 5.3

The worst is behind us, but recovery will be gradual and uneven

There are growing signs that the worst of the economic shock is behind the Canadian and global economies. Across Canada, all orders of government are working together to gradually and safely re-open the economy, guided by health considerations. The recession likely reached its lowest point in late April, although a large share of the economy still remains idled. In May, prompted by signs that COVID-19 transmission is increasingly mitigated and sufficient public health measures are in place to detect and manage pockets of emerging transmission, jurisdictions across Canada began taking steps to safely open previously restricted aspects of the economy. Encouragingly, an increasing number of businesses across sectors like retail, manufacturing and construction report now being fully open.

This has translated into a soft rebound in measures of mobility and workplace attendance across the country (Chart 2.13). Weekly credit and debit card spending data suggest that sales started picking up from the middle of April. Home sales and listings have also seen a partial bounce back in recent weeks. Mortgage payment deferrals and income support measures, such as CEWS and CERB, have helped avoid a rise in distressed sales, keeping house prices relatively stable so far, and prevented longer term damage to the economy.

Strong action from the government, like the CEWS and CERB, has helped maintain consumer purchasing power and provided greater confidence to households that they have the support needed to meet their needs. As economic activity increases and sectors reopen, higher economic output, stemming from increased spending, will translate into large rebounds in real GDP growth. Beyond these initial rebounds, the pace of economic growth is likely to remain soft as some containment measures, such as travel restrictions, will remain for some time. Further, the extent to which these public health measures may need to be adjusted given the evolution of the epidemic adds uncertainty around the pace of economic growth over the recovery.

Chart 2.13
Mobility Trends by Province
For details, see text version.
Note: baseline is the median value of same weekday during 5-week period of Jan. 3 to Feb. 6, 2020. Last data point is June 27, 2020. Average of visits to retail & recreation and workplaces destination categories.
Source: Google Community Mobility Reports.
  • Text version
    CA NL PE NS NB QC ON MB SK AB BC
    Decline through mid-April -75.5 -77.5 -82 -83.5 -84 -72 -84 -78.5 -67 -67.5 -65
    Rebound since mid-April 59 67.5 76 69.5 74 55 65 69 54.5 52.5 45.5
    Current movements versus pre-covid situation -16.5 -10 -6 -14 -10 -17 -19 -9.5 -12.5 -15 -19.5
Restaurant and Hotel Activity and Consumer Spending
For details, see text version.
Notes: Seated diners at restaurants across all channels: online reservations, phone reservations, and walk-ins. Last data points are June 30, 2020 for restaurants, the week ending June 27, 2020 for hotels and June 29 for Interac Debit transactions (total dollar value, 7-day moving average). Interac Debit is the network used for most debit transactions at the point of sale in Canada. Interac Debit is separate from e-Transfer, automated banking machine cash withdrawals and other Interac products.
Sources: OpenTable; Hotel News Resource; Interact Corp.
  • Text version
    Date per cent change
    Feb29 -1.6
    Mar7 -5.2
    Mar14 -24.3
    Mar21 -65
    Mar28 -76.1
    Apr4 -79
    Apr11 -81.2
    Apr18 -77.7
    Apr25 -76.9
    May2 -75.8
    May9 -73.9
    May16 -72.5
    May23 -71.5
    May30 -70.4
    Jun6 -70.3
    Jun13 -68
    Jun20 -66.1
    Jun27 -62.2

Meanwhile, current indicators like air travel, in-person restaurant dining and hotel visits show that many services are still running at a fraction of previous levels despite the lifting of some restrictions. Declines in rail carloadings also suggest trade volumes could continue to fall in May, despite the initial reopening across the country, with latest data pointing to some improvement in June.

These initial steps, along with strong public policy response, have coincided with some improvement in consumer and business confidence. For most advanced economies, business activity readings improved in May and June – from their April trough – although the levels of activity remain depressed, as only parts of their respective economies have started to re-open. In Canada, the latest readings on the Conference Board’s Indexes of Consumer and Business Confidence have notably improved, but they remain at weak levels historically. And, while recent readings for small businesses have shown some encouraging signs of improvement, many firms continue to report operating below half the normal capacity amid ongoing demand weakness and health-related restrictions (Chart 2.14).

Chart 2.14
Consumer Confidence
For details, see text version.
Note: Last data point is June 2020.
Source: Conference Board of Canada.
  • Text version

    Over the 2008-2019 period, consumer confidence has ranged from about 55 to 130, around an historical average since 2002 of about 105, along with the economic cycle. It was above its historical average in January and February 2020 before plunging to close to 45 in March. It rebounded in the following two months, standing at about 80 as of May 2020.

Small Business Sentiment
For details, see text version.
Notes: The index combines balance of opinion answers (much stronger, somewhat stronger and about the same); an index level of about 65 indicates that the economy is growing at its potential. Last data point is June 2020.
Source: Canadian Federation of Independent Businesses.
  • Text version
    Consumer confidence Historical average
    Jan2008
    Feb2008
    Mar2008
    Apr2008
    May2008
    Jun2008
    Jul2008
    Aug2008
    Sep2008 59.9 60.9
    Oct2008 45.2 60.9
    Nov2008 44.5 60.9
    Dec2008 39.4 60.9
    Jan2009 39.4 60.9
    Feb2009 45.0 60.9
    Mar2009 43.1 60.9
    Apr2009 55.0 60.9
    May2009 60.3 60.9
    Jun2009 58.5 60.9
    Jul2009 58.6 60.9
    Aug2009 65.7 60.9
    Sep2009 68.7 60.9
    Oct2009 67.0 60.9
    Nov2009 68.0 60.9
    Dec2009 63.8 60.9
    Jan2010 67.0 60.9
    Feb2010 68.5 60.9
    Mar2010 69.7 60.9
    Apr2010 66.2 60.9
    May2010 67.3 60.9
    Jun2010 66.4 60.9
    Jul2010 65.7 60.9
    Aug2010 64.9 60.9
    Sep2010 63.6 60.9
    Oct2010 67.0 60.9
    Nov2010 64.2 60.9
    Dec2010 69.3 60.9
    Jan2011 68.8 60.9
    Feb2011 69.2 60.9
    Mar2011 69.2 60.9
    Apr2011 70.6 60.9
    May2011 66.6 60.9
    Jun2011 66.2 60.9
    Jul2011 67.9 60.9
    Aug2011 61.9 60.9
    Sep2011 62.9 60.9
    Oct2011 63.4 60.9
    Nov2011 63.7 60.9
    Dec2011 65.2 60.9
    Jan2012 65.1 60.9
    Feb2012 66.0 60.9
    Mar2012 67.7 60.9
    Apr2012 66.5 60.9
    May2012 64.8 60.9
    Jun2012 62.0 60.9
    Jul2012 60.9 60.9
    Aug2012 60.0 60.9
    Sep2012 62.1 60.9
    Oct2012 66.3 60.9
    Nov2012 62.7 60.9
    Dec2012 62.5 60.9
    Jan2013 65.4 60.9
    Feb2013 66.3 60.9
    Mar2013 62.8 60.9
    Apr2013 62.4 60.9
    May2013 62.1 60.9
    Jun2013 59.6 60.9
    Jul2013 64.5 60.9
    Aug2013 65.8 60.9
    Sep2013 64.5 60.9
    Oct2013 65.0 60.9
    Nov2013 65.7 60.9
    Dec2013 62.8 60.9
    Jan2014 63.9 60.9
    Feb2014 64.6 60.9
    Mar2014 64.1 60.9
    Apr2014 65.9 60.9
    May2014 67.1 60.9
    Jun2014 63.5 60.9
    Jul2014 63.0 60.9
    Aug2014 65.4 60.9
    Sep2014 65.7 60.9
    Oct2014 67.6 60.9
    Nov2014 65.9 60.9
    Dec2014 61.9 60.9
    Jan2015 63.5 60.9
    Feb2015 59.1 60.9
    Mar2015 61.5 60.9
    Apr2015 60.5 60.9
    May2015 60.6 60.9
    Jun2015 59.4 60.9
    Jul2015 58.2 60.9
    Aug2015 56.7 60.9
    Sep2015 56.0 60.9
    Oct2015 58.9 60.9
    Nov2015 58.7 60.9
    Dec2015 55.7 60.9
    Jan2016 54.3 60.9
    Feb2016 54.7 60.9
    Mar2016 52.3 60.9
    Apr2016 59.2 60.9
    May2016 58.2 60.9
    Jun2016 60.0 60.9
    Jul2016 57.6 60.9
    Aug2016 59.8 60.9
    Sep2016 59.0 60.9
    Oct2016 57.7 60.9
    Nov2016 59.4 60.9
    Dec2016 60.7 60.9
    Jan2017 60.1 60.9
    Feb2017 62.9 60.9
    Mar2017 62.9 60.9
    Apr2017 64.4 60.9
    May2017 66.0 60.9
    Jun2017 60.9 60.9
    Jul2017 60.7 60.9
    Aug2017 59.8 60.9
    Sep2017 56.9 60.9
    Oct2017 57.2 60.9
    Nov2017 59.3 60.9
    Dec2017 59.7 60.9
    Jan2018 62.7 60.9
    Feb2018 62.4 60.9
    Mar2018 60.7 60.9
    Apr2018 56.6 60.9
    May2018 62.5 60.9
    Jun2018 62.2 60.9
    Jul2018 56.8 60.9
    Aug2018 61.6 60.9
    Sep2018 61.4 60.9
    Oct2018 60.5 60.9
    Nov2018 61.2 60.9
    Dec2018 53.6 60.9
    Jan2019 56.1 60.9
    Feb2019 59.0 60.9
    Mar2019 55.9 60.9
    Apr2019 56.7 60.9
    May2019 59.7 60.9
    Jun2019 61.5 60.9
    Jul2019 57.8 60.9
    Aug2019 60.6 60.9
    Sep2019 59.3 60.9
    Oct2019 59.8 60.9
    Nov2019 56.1 60.9
    Dec2019 55.5 60.9
    Jan2020 55.3 60.9
    Feb2020 60.5 60.9
    Mar2020 30.8 60.9
    Apr2020 46.4 60.9
    May2020 52.5 60.9
    Jun2020 54.6 60.9
Figure 2.2
Consumer and business behavior and confidence will take some time to rebuild
For details, see text version.
  • Text version

    The figure includes three text boxes. The text in the boxes is:
    1) Consumers will be hesitant to resume old habits and maintain some social distancing in the face of continued health risks ("FOGO", fear of going out).
    2) Looming uncertainty about employment and income prospects, and lasting scarring effects (e.g., higher debt) may dampen household spending.
    3) Businesses may be worried about the strength of demand and resurgence of uncontrolled transmission of the virus and be cautious before rehiring or investing.

COVID-19 and the measures to contain its spread have sharply reduced revenues and put a large strain on businesses’ cash flow, resulting in acute financial stress for many. Declines in business revenue were widespread but the greatest impact occurred in accommodation and food services, as well as in the arts, entertainment, and recreation industry. SMEs have also been particularly affected – only 58 per cent have fully reopened as of June 30th – with some sectors struggling to re-open at all and only about 23 per cent of all SMEs surveyed earning their usual sales (Chart 2.15).

Chart 2.15
Share of Small Businesses Fully Open as of June 30, by Sector
For details, see text version.

Source: Canadian Federation of Independent Business.

  • Text version
    per cent
    Hospitality 28
    Arts & Recreation 36
    Social Services 42
    Retail 55
    Finance & real estate 56
    All Businesses 58
    Transportation 58
    Enterprise management 62
    Professional services 66
    Personal services 69
    Wholesale 69
    Manufacturing 72
    Agriculture 77
    Construction 83

Broad support provided through the Plan is helping businesses to cover their fixed costs and bridge cash shortfalls through the most difficult months of the crisis. To date, bankruptcies and arrears remain low. Businesses have improved their cash positions by making use of deferrals on financial obligations and rent relief, seeking direct financial support, and drawing down on bank credit lines. Credit authorizations from financial institutions and business credit growth have increased since March 2020, suggesting an increased availability and use of credit (Chart 2.16), though some firms have reportedly been more reluctant to add to their already high debt levels given the economic uncertainty. For these firms, grants and payment deferrals have been important to ease cash flow constraints. In particular, Canada’s Emergency Wage Subsidy is helping businesses to pay workers affected by the pandemic, and the government’s suite of business credit availability programs are there to help firms bridge to the other side of the crisis.

Chart 2.16
Household Credit Growth
For details, see text version.
Notes: Consumer credit includes credit extended to individuals chiefly for financing personal consumption, such as lines of credit, auto loans, and credit cards. Last data point is May 2020.
Source: Bank of Canada.
Business Credit Growth
For details, see text version.
Note: “Business” includes nonfinancial corporations. Last data point is May 2020.
Source: Bank of Canada.
  • Text version
    Total Consumer credit Mortgage credit
    January 2019 3.5 2.7 3.8
    February 2019 3.5 2.2 4.0
    March 2019 3.6 2.5 4.0
    April 2019 3.6 2.8 3.9
    May 2019 3.8 2.7 4.2
    June 2019 4.0 2.8 4.5
    July 2019 4.1 2.5 4.8
    August 2019 4.2 2.3 5.0
    September 2019 4.0 1.8 4.9
    October 2019 4.4 1.9 5.4
    November 2019 4.2 2.2 5.0
    December 2019 4.6 3.0 5.2
    January 2020 4.6 3.1 5.2
    February 2020 4.9 2.9 5.7
    March 2020 5.7 3.4 6.6
    April 2020 3.3 -7.1 7.5
    May 2020 1.1 -15.4 8.2
  • Text version - Business Credit Growth (annualized 3-month growth rate)
    Total Loans Debt securities Equity
    January 2019 7.6 12.8 0.1 8.1
    February 2019 6.7 10.1 -1.2 9.7
    March 2019 6.0 9.4 -0.9 8.0
    April 2019 6.1 9.6 3.5 4.4
    May 2019 6.0 9.4 7.4 1.1
    June 2019 4.5 7.1 5.6 0.5
    July 2019 3.3 7.1 0.9 0.9
    August 2019 3.3 8.7 -1.8 1.2
    September 2019 3.7 7.3 1.7 1.1
    October 2019 3.8 5.0 5.6 0.8
    November 2019 3.5 4.1 6.7 0.1
    December 2019 3.4 5.0 5.7 -0.4
    January 2020 4.0 9.4 3.8 -2.2
    February 2020 3.3 8.9 3.6 -3.5
    March 2020 7.6 22.7 -0.1 -3.1
    April 2020 11.1 30.5 -0.1 -1.4
    May 2020 10.1 20.9 6.8 0.0

As businesses reopen, they will have to navigate a challenging new environment. Restrictions vary by province and change rapidly. Many firms will be challenged by the sheer size of the shock to domestic and foreign demand over the recovery, as well as any lasting changes to consumer spending and saving behaviour. Canadian exports are expected to begin recovering as the economies of our key trade partners’ economies progressively reopen. The path is expected to be uneven and protracted, with countries recovering at different paces. This will carry added costs for businesses, particularly for those that are part of complex supply chains crossing many regions. Further, trade tensions could add a layer of uncertainty and weigh on business investment decisions. These conditions will likely weigh on demand for credit and investment plans in the near term until businesses are able to see a path to profitability.

Despite clear challenges individual households may be facing, overall Canadians’ household finances appear to be holding up well so far. Millions of Canadians have been supported through the government’s emergency measures and consumer insolvencies and debt arrears remain low. Consumer credit growth plunged to the lowest on record in April, with credit card debt going down, suggesting many consumers did not need to take on additional debt to help make ends meet in the early days of the pandemic. These consumers have been able to deleverage, are saving more and are well positioned for the recovery. Important income supports from governments, like CEWS and CERB, have played a critical role in stabilizing household income and bolstering consumer spending.

Indeed, Department of Finance estimates show that CERB and other direct Government supports to individuals have, on aggregate, replaced the labour income lost by Canadians during the containment phase of the pandemic (Chart 2.17). In addition, payment deferrals and interest rate relief from financial institutions on both mortgage and non-mortgage debt have provided some support to borrowers. Households have also reduced their spending during the pandemic, particularly on big-ticket purchases such as cars, which has reduced the need for additional borrowing. Going forward, the health of household finances will depend on how quickly firms begin to rehire in the coming months as social-distancing measures ease and the debt deferrals wind down.

Chart 2.17
Household Net Labour Income Lost and Key Fiscal COVID-19 Transfers, First Half of 2020
For details, see text version.

Note: Total net labour income lost through first half of 2020 is calculated using LFS total weekly earnings (total employment times weekly wages) through to May and assuming June growth stay same as in May. It is also assumed that self-employed Canadians made 2/3 the average wage of paid employees.
Sources: Statistics Canada; Department of Finance Canada calculations.

Core Monthly Expenses of Households with Mortgages
For details, see text version.

Notes: Households with mortgages in all Canadian provinces are divided into three equal income groups. Figures for each spending category represent the median for all mortgage holding households within the income tercile. Incomes and expenses are on a per earner basis. Figures adjusted to 2020 dollars based on the Consumer Price Index.
Source: Department of Finance Canada calculations using Statistic's Canada's 2017 Survey of Household Spending Public Use Microdata File.

  • Text version
    billions
    Total net labour income lost 44.6
    Total special transfers 65.3
    Canada Emergency Response Benefit 53.9
    Supplementary payments under GST Credit 5.5
    Enhanced Canada Child Benefit 2.0
    Canada Emergency Student Benefit 1.4
    Canada Student Service Grant 0.5
    Provincial measures 2.0
  • Text version - Core Monthly Expenses of Households with Mortgages (monthly expenses per earner)
    Shelter Food Phones and internet
    Bottom third 928 340 112
    Middle third 1,081 443 120
    Top third 1,523 536 142

Canadian Economic Outlook

The average of private sector economic forecasts has been used as the basis for fiscal planning since 1994; this approach introduces an element of independence into the Government's fiscal forecast. The Department of Finance Canada surveyed a group of private sector economists in the third week of May.

Private sector economists expect real GDP to decline 6.8 per cent in 2020 (Table 2.2 below), before rebounding by 5.5 per cent in 2021 (see Annex 2 for full details). In the second quarter of 2020, there was an unprecedented decline in activity, with real GDP expected to fall by 41 per cent on an annualized basis (Chart 2.18).

Currently, the average of private sector forecasts, which factors in the economic impact of government’s decisive fiscal support, outlines a faster rebound in real GDP than in the past three recessions. While private sector views are relatively aligned on the magnitude of the second quarter decline, their third quarter growth forecasts diverge widely, reflecting tremendous uncertainty around, for example, the pace of rehiring and investment, rebound in consumer activity, etc. The Department of Finance will continue to actively engage with private sector economists to gauge the pace of the recovery over the second half of 2020.

Chart 2.18
Real GDP Growth
For details, see text version.
Note: Range is constructed by taking the highest and lowest growth rates among individual forecasts in each quarter.
Sources: Statistics Canada; Department of Finance Canada May 2020 survey of private sector economists.
Unemployment Rate
For details, see text version.
Note: Range is constructed by taking the highest and lowest levels among individual forecasts in each quarter.
Sources: Statistics Canada; Department of Finance Canada September 2019 and May 2020 surveys of private sector economists.
  • Text version
    2019
    Q4
    2020
    Q1
    2020
    Q2
    2020
    Q3
    2020
    Q4
    2021
    Q1
    2021
    Q2
    2021
    Q3
    2021
    Q4
    Lower 0.560227 -8.17282 -48.8557 -4.34116 7.659254 1.39844 1.779096 1.468113 1.654746
    Range 0 0 15.89642 76.81485 20.19068 11.40156 5.511033 4.031887 4.545254
    2020 Economic and Fiscal Snapshot 0.560227 -8.17282 -40.645 32.24049 13.8011 6.124013 4.234416 3.179897 3.15682
  • Text version - Unemployment Rate (per cent)
    2019
    Q4
    2020
    Q1
    2020
    Q2
    2020
    Q3
    2020
    Q4
    2021
    Q1
    2021
    Q2
    2021
    Q3
    2021
    Q4
    2020 Economic and Fiscal Snapshot 5.7 6.3 13.2 10.5 9.2 8.4 7.9 7.6 7.2
    Lower 6.3 11.8 7.0 6.9 6.7 5.9 5.8 5.8
    Range 0.0 2.6 6.2 4.1 2.6 3.1 3.2 3.2
    December 2019 EFU 5.7 5.8 5.8 5.8 5.8 5.8 5.7 5.8 5.8

Several outlook scenarios possible in the wake of the pandemic

The results of the private sector survey indicate that the expected contraction in Canadian real GDP is much worse than experienced during the 2008-2009 financial crisis. Still, the survey results are most consistent with slow, steady and relatively low levels of ongoing community transmission of the virus. As a result, risks around this outlook are elevated and tilted to the downside.

The prospect of a further resurgence of the virus and another potential wave of public health measures to contain it in Canada or in key global economies would severely hamper the economic recovery. Acknowledging the great uncertainty over future health outcomes, modelling done by the Public Health Agency of Canada suggests future waves of the virus could equal or surpass the initial spread of COVID-19 in terms of the number of infections. A resurgence of the virus could be less economically damaging than the initial spread. However, with increased investment and experience with work from home, protocols and guidance on maintaining physical distancing in the workplace, and scaled up testing and tracing, it is possible to maintain confidence that the economy can continue to operate with less disruption.

However, even without resurgence of uncontrolled transmission, global uncertainty is likely to remain for some time. In the face of this, businesses have to decide when to start hiring and investing again. There is a risk that this process could be prolonged until there is more certainty that the virus is no longer a threat and that the global economic recovery is solidly underway. In the interim, many businesses will have to follow strict physical distancing protocols and will be operating at greatly reduced capacity.

Canadians are likely to remain cautious until they are assured that risks from the virus are low, potentially delaying a return to work. Parents’ return to work could also be delayed by childcare responsibilities, most likely to impact mothers’ employment status. Canadians may also choose to delay major purchases such as cars or houses until signs that hiring and the recovery is well underway.

Reduced global trade and supply chain disruptions remain a vulnerability given Canada’s dependence on international trade. However, supply-chain reconfiguration is also likely, whether it be to secure supplies of medical equipment and personal protection equipment via domestic production, or whether firms choose to diversify their suppliers to guard against the next major disruption. Ultimately, these shifts will make supply chains more durable going forward, but the size of the costs, and who bears them, has important implications over the recovery for both households and businesses.

Potential Economic Impacts Should Public Health and Recovery Conditions Change

To illustrate the consequences of different health outcomes and the associated responses of households and businesses, the Department of Finance has considered two alternative scenarios to the projections of the private sector economists. Given the high degree of uncertainty as to how public health and economic conditions will evolve over the coming months, these are presented simply to indicate the extent to which the published forecast could deviate and how this could change the fiscal outlook overall.

Uneven and Gradual Recovery

The first scenario assumes a slower pace of return to normal activity for households and businesses and thus a slower recovery in the third quarter of 2020. Under this scenario, households remain cautious due to repetitive peaks of viral transmission of the virus and continue to avoid most public spaces, including restaurants, local travel and non-essential shopping. Activity in the business sector creeps back up but does not fully rebound as businesses have to maintain stringent containment measures such as limiting the number of people in stores and enhanced cleaning protocols. Many businesses continue to operate below capacity with some deciding not to re-open given the significant costs of operating in this environment and still low levels of demand.

Some sectors have more difficulties re-opening as public fear of going out makes certain activities impractical. Prolonged shutdowns increasingly distance some workers from the labour market, resulting in more permanent job losses. The effect this has is an even more uneven recovery across Canada with activity in certain sectors and provinces lagging behind. Overall, real GDP in 2020 declines by 9.6 per cent under this scenario, a more pronounced drop than projected by the private sector survey.

With the pace of business resumption still uncertain it is unknown whether this scenario will come to pass or not, but it illustrates the potential downside risks that could still exist.

Virus Resurgence Scenario

As the search for a vaccine remains underway, the other downside scenario considers a resurgence of uncontrolled transmission of the virus later this year followed by a series of smaller waves in 2021. In this scenario, new cases of COVID-19 start to accelerate again at an exponential rate.

The resurgence coincides with the annual flu season, putting high enough demands on the health care system that another round of public health containment measures, including some extent of renewed shutdowns of social and economic spaces, is implemented. The result is another decline in economic activity. However, the drop in activity this time is expected to be less than the first wave. Scaled-up testing and tracing operations and robust public adoption of mask-wearing and use of other personal protective equipment make it possible to control the virus much more quickly.

More workers are able to effectively work from home during this episode since investments in tools and equipment were already made during the first wave. Nevertheless, the economic damage from a resurgence of uncontrolled transmission is large. Businesses that are still recovering are hit again by renewed shutdowns. Households, particularly those in lower-income and other vulnerable groups, are hit hard by another round of layoffs as unemployment is still likely to be high. Further declines in consumer and business confidence also weigh on spending.

Overall, this translates into a deeper and longer-lasting negative impact on the economy, with a decline of 11.2 per cent in real GDP in 2020 and the level of real GDP remaining below that of even the most pessimistic private sector forecast by the end of 2021.

Table 2.3
Average Private Sector Economic Forecasts
per cent, unless otherwise indicated
  2020Q1 2020Q2 2020Q3 2020Q4 2020 2021
Real GDP Growth1            
    Economic and Fiscal Update 2019 1.6 1.6 1.7 1.6 1.6 1.8
    2020 Economic and Fiscal Snapshot -8.2 -40.6 32.2 13.8 -6.8 5.5
GDP Inflation1            
    Economic and Fiscal Update 2019 2.1 2.1 2.1 1.9 2.0 2.0
    2020 Economic and Fiscal Snapshot 1.8 -8.3 3.7 4.3 0.5 2.2
Nominal GDP Growth1            
    Economic and Fiscal Update 2019 3.7 3.8 3.9 3.6 3.7 3.8
    2020 Economic and Fiscal Snapshot -6.5 -45.5 37.1 18.6 -6.3 7.9
Nominal GDP Level ($ billions)1            
    Economic and Fiscal Update 2019         2,390 2,481
    2020 Economic and Fiscal Snapshot         2,158 2,328
      Difference with Economic
       and Fiscal Update 2019
           
        2020 Economic and Fiscal Snapshot         -231 -153
3-month Treasury Bill Rate            
    Economic and Fiscal Update 2019 1.5 1.5 1.5 1.5 1.5 1.6
    2020 Economic and Fiscal Snapshot 1.2 0.3 0.3 0.2 0.5 0.3
10-Year Government Bond Rate            
    Economic and Fiscal Update 2019 1.4 1.6 1.7 1.8 1.6 2.0
    2020 Economic and Fiscal Snapshot 1.1 0.6 0.7 0.7 0.8 1.0
1 Figures have been restated to reflect the historical revisions in the Canadian System of National Accounts.
Sources: Statistics Canada; For Economic and Fiscal Update 2019, Department of Finance Canada September 2019 survey of private sector economists; for 2020 Economic and Fiscal Snapshot, Department of Finance Canada May 2020 survey of private sector economists.

Fiscal Situation

Canada entered this crisis in a strong fiscal position enabling the government to take decisive action to protect Canadians and businesses from the impacts of the pandemic. Canada’s COVID-19 Economic Response Plan (the Plan) includes more than $230 billion in measures to protect the health and safety of Canadians and provide direct support to Canadian workers and businesses. It also includes a further $85 billion in tax and customs duty payment deferrals to meet liquidity needs of businesses and households and to help stabilize the Canadian economy. Combined, these measures represent nearly 14 per cent of Canada’s GDP, making Canada’s plan one of the most generous response plans in the world.

The decisive and substantial support provided by the government helped prevent further damage to the economy this year by replacing lost income and avoiding higher unemployment (Chart 2.19).

Department of Finance estimates suggest that real GDP could have fallen by over 10 per cent in 2020 without this support, with the unemployment rate rising by a further two percentage points.

Chart 2.19
Impact of Direct Support Measures on Real GDP Growth and Unemployment Rate for 2020
For details, see text version.

Sources: Department of Finance Canada calculations based on the May 2020 survey of private sector economists.

  • Text version
    Real GDP growth (per cent) Unemployment rate (per cent)
    With support measures -6.000 9.000
    Without support measures -10.000 11.000

Beyond the important and immediate requirement to stabilize household and business finances during the shutdown and recovery phases of the COVID-19 crisis, Canada’s response will have longer-lasting positive impacts for the Canadian economy during the recovery. By acting quickly and extensively, Canada avoided a deeper, more prolonged and costly downturn, which would have had detrimental impacts not only on the jobs and incomes of individual Canadians, but also on federal and provincial government finances. Absent actions taken by the government to offset the impact of the COVID-19 crisis, the federal deficit and debt-to-GDP ratio would have risen substantially, due to the deeper and more prolonged impact of the COVID-19 crisis on Canadian workers and businesses. Provincial governments would have faced similar impacts.

The fiscal results in this report reflect the estimated impact of the Plan as outlined to date. Given the current level of volatility, this plan will continue to evolve as needed, to respond to this unprecedented crisis, and its impact on Canadians. Reflecting the uncertainty surrounding the evolving situation, the fiscal results in this report extend only to the current fiscal year, which is itself subject to a much higher-than-normal degree of uncertainty and represents a best estimate, among a wide range of possible outcomes. As the situation stabilizes, the government will provide an update in the fall with a longer forecast horizon. 

Changes to the Fiscal Outlook

There is a high level of uncertainty surrounding the fiscal outlook in the current economic environment, as the unprecedented severity and suddenness of the shock to employment and income levels mean the standard relationships between economic and fiscal variables may no longer apply. Further, as discussed, the government has launched a number of support measures with an estimated fiscal cost of $236 billion to date. These investments have protected the Canadian economy. However, cost estimates for many of these programs have been difficult to establish, given that they are brand new programs, launched in a highly volatile economic environment. Estimates for these measures will be refined as data on program usage and costs becomes available.

In addition to spending, the fiscal outlook is also greatly affected by the underlying changes in nominal GDP. Without any spending at all, the simple decline in economic activity will worsen the overall fiscal environment as tax revenues decline and the relative size of the deficit and debt increase in proportion to lower levels of output in the economy. As shown in Table 2.4 below, economic and fiscal developments are estimated to have added $81.3 billion to the deficit in 2020-21 before the fiscal impact of the COVID-19 Economic Response Plan. 

The temporary measures implemented through the government’s economic response plan will have a significant impact on the federal deficit (Table 2.4). Coupled with the severe deterioration in the economic outlook, these result in a projected deficit of $343.2 billion in 2020-21. By comparison, this spending level is on par with but lower than the peak deficit (as a per cent of GDP) experienced by Canada during the Second World War. This is truly the challenge of our lifetime. As temporary investment measures come to an end and GDP recovers over time, deficits are expected to retreat. 

Due to the unprecedented degree of uncertainty clouding the economic outlook, providing a fiscal forecast beyond the current fiscal year with an appropriate degree of confidence is not possible at this time, and would potentially be misleading. As a result this snapshot provides an update of the current economic and fiscal outlook to the end of 2020-21.

Table 2.4
Economic and Fiscal Developments since Economic and Fiscal Update (EFU) 2019
billions of dollars
 

2018–
2019  

2019–
2020  

2020–
2021  

EFU 2019 budgetary balance -14.0 -26.6 -28.1
Adjustment for risk from EFU 2019   1.5 3.0
EFU 2019 budgetary balance
 (without risk adjustment)
-14.0 -25.1 -25.1
  Economic and fiscal developments
  since EFU 201
9
  0.1 -81.3
Revised budgetary balance before policy actions and investments   -25.0 -106.4
     Policy actions since EFU 2019   -1.3 -9.0
 Canada’s COVID-19 Economic Response Plan   -8.1 -227.9
    Protecting Health and Safety   -0.6 -18.4
    Support to Individuals   -7.5 -181.1
       Of which: Canada Emergency Response Benefit   -7.4 -73.1
                       Canada Emergency Wage Subsidy     -82.3
    Support to Businesses   0.0 -21.3
    Other Support Measures   0.0 -7.1
Budgetary balance -14.0 -34.4 -343.2
Budgetary balance (per cent GDP) -0.6 -1.5 -15.9
Federal debt (per cent of GDP) 30.8 31.1 49.1
Totals may not add due to rounding.

Taking into account the projected decline in nominal GDP, the federal debt-to-GDP ratio is projected to rise to 49.1 per cent in 2020-21. However, record low interest rates have made Canada’s debt significantly more affordable (Chart 2.20). Market rates at which the federal government can refinance existing debt or finance new debt are at historical lows of less than 0.8 per cent for maturities up to 10 years. As a consequence of these developments, the government will save over $4 billion in public debt charges in 2020-21 compared to the forecast presented in the 2019 Economic and Fiscal Update in December 2019. This is despite a significant increase in total borrowing due to the COVID-19 response.

The government is taking advantage of the robust market demand for Government of Canada bonds by issuing more longer term debt (see Annex 3). This will ensure that much of Canada’s outstanding debt is less vulnerable to interest rate increases in the future, which will help to maintain Canada’s debt sustainability for generations to come.

Despite the necessary increase in federal borrowings, public debt charges are expected to fall in 2020-21, from 2019-20 levels.

Chart 2.20
Federal Debt and Public Debt Charges
For details, see text version.

Sources: Fiscal Reference Tables; Finance Canada calculations

  • Text version
    Federal Debt (per cent) Public Debt Charges (per cent) Federal Debt (per cent) Public Debt Charges (per cent)
    1994 66.4 5.6
    1995 66.8 6.0
    1996 65.7 5.5
    1997 61.9 4.8
    1998 59.1 4.6
    1999 53.7 4.3
    2000 47.2 4.0
    2001 44.7 3.5
    2002 42.3 3.1
    2003 39.5 2.9
    2004 37.0 2.6
    2005 33.9 2.4
    2006 31.2 2.3
    2007 29.0 2.1
    2008 28.2 1.7
    2009 33.4 1.7
    2010 33.4 1.7
    2011 33.4 1.6
    2012 34.0 1.4
    2013 32.9 1.3
    2014 31.5 1.2
    2015 31.9 1.1
    2016 32.1 1.0
    2017 31.3 1.0
    2018 30.8 1.0 30.8 1.0
    2019 31.1 1.1
    2020 49.1 0.9

While this year’s deficit estimate is elevated, it is in line with the fiscal response deployed by Canada’s peer countries and was necessary in order to avoid a more significant economic impact and prolonged economic and fiscal challenges. In the wake of the crisis, governments around the world were forced to deploy massive fiscal supports to rescue their economies, representing an unprecedented increase in global public debt levels. 

Canada continues to be among the most highly rated G7 countries and its strong credit rating is also contributing to its low cost of borrowing. The federal government’s strong fiscal position heading into this crisis meant Canada had the room to borrow to protect the Canadian economy. Government actions taken during the temporary shutdown of the Canadian economy prevented individual Canadians from having to take on unsustainable levels of debt, ensuring a stronger recovery and avoiding longer-term damage to the economy.

Coming out of the crisis, Canada is expected to maintain its low-debt advantage (Chart 2.21) among G7 countries. The government’s commitment to maintaining this advantage will help ensure borrowing costs remain low and that future generations are not burdened with COVID-19 related debt overhang.

Chart 2.21
G7 General Government Net Debt, 2019 and 2020
For details, see text version.

Notes: The general government definition includes the central, state, and local levels of government, as well as social security funds. For Canada, this includes the federal, provincial/territorial, and local government sectors, as well as the Canada Pension Plan and the Quebec Pension Plan. IMF forecasts likely underestimate current debt forecasts as countries have implemented further stimulus since the publication of the Fiscal Monitor in early April.

Sources: IMF Fiscal Monitor (April 2020); Department of Finance Canada calculations.

  • Text version
    2019 Net Debt (per cent of GDP) 2020 Net Debt (per cent of GDP)
    Canada 26 15
    Germany 41 8
    United Kingdom 75 10
    G7 average 85 15
    France 90 17
    United States 84 23
    Italy 123 20
    Japan 154 15

As a result of responsible fiscal management in the years leading up to the crisis, Canada’s debt levels are projected by international organizations such as the International Monetary Fund (IMF) and the Organization for Economic Cooperation and Development (OECD) to remain well below many of its peers. The OECD projects that Canada’s debt levels will rise less than those of many advanced economies, even in the event of a more pessimistic scenario where there is a resurgence of the virus (Chart 2.22).

Chart 2.22
Increases in General Government Gross Debt-to-GDP Ratio, from 2019 to 2021
For details, see text version.

Note: EU countries use the Maastricht definition of debt.
Source: Organisation for Economic Co-operation and Development, June 2020 Economic Outlook - All editions.

  • Text version
    Single-hit scenario (percentage points change as a share of GDP) Additional impact from double-hit scenario (percentage points change as a share of GDP)
    Spain 20 13
    Japan 22 9
    U.S. 24 7
    Italy 17 13
    Greece 14 14
    France 18 10
    OECD 19 8
    Germany 16 11
    EA 17 16 10
    Belgium 14 13
    Israel 18 6
    Ireland 16 9
    Netherlands 16 7
    Poland 15 7
    New Zealand 17 5
    Slovenia 17 5
    Slovak Republic 15 6
    Portugal 14 7
    Australia 12 8
    Estonia 14 5
    Austria 12 6
    Denmark 10 7
    Lithuania 13 5
    Sweden 14 3
    Iceland 15 1
    Finland 13 3
    Canada 10 5
    Hungary 11 4
    Latvia 8 6
    Czech Republic 8 6
    U.K. 6 7
    Luxembourg 10 2
    Switzerland 7 4
    Korea 5 1

[1] https://pm.gc.ca/en/news/statements/2020/04/28/first-ministers-statement-shared-public-health-approach-support

Page details

Date modified: