Forget the word recession. As the coronavirus health emergency shuts down part of Canada’s economy, experts are dusting off a word that’s been relinquished to the history books for nearly a century: depression.
“This isn’t business as usual, even for a recession,” starts a recent report from CIBC’s economics team, for example.
The paper predicts Canada’s GDP could contract by an annualized 15 to 20 per cent in the April-to-June period in inflation-adjusted terms. The unemployment rate, meanwhile, could shoot up to nine per cent, up from a reading of 5.6 per cent in February.
That isn’t the stuff of your run-of-the-mill recession, the report notes. But “it’s not the start of a lengthy Great Depression” either, the CIBC team reassures readers.
That’s because the collapse in business activity comes from government-mandated requirements of social distancing rather than endemic weakness in the economy.
As steep as the initial plunge may be, if it is also short-lived, Canada will be able to, “with some pains,” ride out the crisis, the report predicts.
But whether the economy will indeed be able to quickly bounce back from the abyss hinges, in large part, on what the government does to help blunt the impact of the pandemic.
And while Ottawa has already announced a slew of extraordinary measures, including $27 billion in direct financial aid to households and businesses, many say Canada needs to do more — much more.
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