E Canada’s Economy Is In Trouble; Job Market Recovery Will Be Painfully Slow

Canada is a small, open economy with little external leverage on its trading partners. With respect to certain sectors of Canada’s economy, employment in such fields as travel, dining and entertainment may never return to pre-pandemic levels.

While the high technology information and communications sectors of the economy appear somewhat impervious to the pandemic, nonetheless these industries only account for about 5% of Canada’s GDP. 

A recent projection by BMO Capital Markets forecasted Canada’s GDP to contract by 6% this year — “by far the deepest annual decline in economic activity in the post-war era.” Canadian GDP growth was 1.7% in 2019. Canada’s economy is optimistically projected to rebound by 6% in 2021.

Nonetheless, the unemployment rate outlook for Canada remains extremely bleak. Canada’s average unemployment rate was 5.7% in 2019, which was close to a full employment measure. The Canadian unemployment rate this year is expected to average 9.5%, and barely decline to 8% in 2021. 

In the final analysis the key propellant behind the Canadian economy will be how well the US and the global economy recovers, and as well, how competitive Canadian industry will be in the next economic phase.  

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Arthur Donner 3 months ago Author's comment

a situation unlike no other


William K. 3 months ago Member's comment

The problem is that some companies can just close for a while or change and allow work from home, while some other companies collapse and those jobs are gone forever.

Adam Reynolds 3 months ago Member's comment

True, There are very clear winners (e.g. Zoom, Amazon, etc.) and losers (AirBnB and pretty much every airline, cruise ship, hotel, restaurant, etc.).