Canadian economy expected to contract six per cent in 2020
The BMO Financial Group BMO Blue Book, released July 22, says small businesses are the foundation of local economies and their rebound will influence the country’s recovery.
The outlook, combining expertise from BMO’s economists and bankers and published by BMO Economics and BMO Business Banking, says the Canadian economy will contract by roughly six per cent in 2020, “by far the deepest annual decline in economic activity in the post-war era,” they write. “Growth is expected to rebound to roughly six per cent next year, helping to bring the jobless rate down markedly,” adds BMO’s chief economist, Doug Porter.
The report includes an outlook for Canada at large, for each province and for the greater Toronto area. It also looks at five sectors, including technology, agriculture, energy, manufacturing and construction.
“There are clear signs that the Canadian and global economies have begun the initial stages of recovery,” Porter writes. “Consumer spending, construction and manufacturing are reviving, in some cases, rapidly so.” He adds that a complete recovery will likely take an extended period of time.
BMO says it expects unemployment to still be north of seven per cent by the end of 2021, two percentage points higher than pre-virus lows.
Mike Bonner, head of Canadian business banking, writes that small businesses have been more adversely affected by the economic downturn, recording almost double the rate of job losses as mid-sized and large firms. “More than any other grouping of businesses it’s crucial that we all help small businesses bridge the gap back to profitability,” he writes.