How the pandemic will affect each province’s economy over the longer term was the subject of a report published on Friday by CIBC Capital Markets.
Oil-dependent provinces such as Alberta are expected to be squeezed as low oil prices affect investment and production. The province’s GDP could fall about 1.5 percentage points in Q2, considering production is estimated to fall 16% year over year during the quarter, the report said.
Other factors to consider for provincial economies are seasonal patterns and tourism.
Manitoba and Saskatchewan, for example, tend to exhibit greater economic activity during March to May — a period in which the worst of the pandemic’s impact coincides.
In contrast, other provinces’ economies rely significantly on tourism, such as P.E.I., Nova Scotia and B.C. In these provinces, a quick rebound isn’t likely as travel restrictions remain in place, the report said. Businesses such as accommodation services and restaurants will feel the effects.
Travel restrictions will also affect immigration trends, which in turn could weigh on housing demand, the report said.
Businesses that focus on domestic trade and essential products will fare better, given the constraints on supply chains and consumer spending. In that respect, P.E.I. and Manitoba, where a greater proportion of exports are focused on the domestic market and essential goods such as food products, could see less weakness in manufacturing, the report said.
The report also noted that some provinces, such as B.C. and Saskatchewan, were better positioned heading into the crisis because they had less debt. As a result, those provinces likely won’t feel so constrained when it comes to government spending.
Economic talk has turned to the best ways to eventually reopen the economy — a topic addressed by the C.D. Howe Institute on Friday.
The framework to reopen the economy should be pan-Canadian, transparent and balance risks of transmission with the economic costs of leaving sectors shut down, said a release from the institute’s crisis working group on business continuity and trade.
“Pan-Canadian” describes an effort that recognizes that provincial governments have jurisdiction for public health measures and will ease restrictions at different times, while federal coordination helps provide consistency, the think-tank said.
The C.D. Howe group also noted that, while governments should plan to restart the economy, Canada isn’t yet out of the woods.
“With the likelihood of a protracted downturn in demand for exports and continuing restrictions on workplace activities, governments will need to make and communicate difficult decisions about which sectors and companies receive direct financial support,” the release said.
For full details, read the CIBC report and C.D. Howe release.