Impact of Covid-19 Pandemic on Canada’s economy

Canada’s economy and businesses have witnessed major disruptions due to economic
restriction during the Covid-19 pandemic. As per the information from the Statistique
Canada- total employment in the country fell by 3 million from February to April 2020 due to
the pandemic. Based on the estimates of GDP, the country witnessed a 9% decline in its GDP
in mid-April and a 2.6% decline in the first quarter of 2020. All this led to decline in index
levels of confidence among SMEs (Business Barometer) in February and March 2020 as
shown below in the graph.

IMPACT ON GDP- Canada

The graph has the data from the year
2015 to 2020 (5 years) that depicts the
GDP in current US$. In 2019, the
GDP was 1.742 trillion and then in
2019 it declined to 1.645 trillion. The
growth rate of GDP was negative (-
5.233%) due to the impact of covid.
The trade was also greatly affected
due to the pandemic which had a
subsequent affect on GDP. In addition
to this, in 2020 the real GDP of
Canada shrank 5.4%, the steepest
annual decline since 1961.
The source of the graph and the data is World Bank National Accounts Data and OECD
National Accounts Data Files.

Fig. 12-month percentage change for real GDP of Canada (2020-2021).

IMPACT ON TRADE DUE TO COVID-19

In the above graph, we depict the year-over-year percentage change in total exports and total
imports in Canada to visualize the impact of the COVID-19 pandemic on trade flows between
2015 and 2020. Beginning in 1st quarter of 2020, we see a significant decline in both exports
and imports compared to the previous quarter, coinciding with the designation of COVID-19
as a global pandemic, prompting governments to implement policy measures such as
lockdowns. These trade-related percentage declines are sometimes two to three times greater
than those seen in Canada's gross domestic product (GDP).

Let us look at how different important sectors have been impacted due to Covid 19 pandemic
in Canada-
1. MERCHANDISE TRADE-

Fig. Merchandize Exports and Imports

Canada's merchandise imports decreased 7.4% in January, with falls in nearly every product
category. This comes after three months of rapid growth in overall imports. Meanwhile,
exports fell 0.2 percent, owing to reduced passenger vehicle and light truck exports. As a
result, Canada's merchandise trade balance swung back into surplus in January 2022, after
reporting its first deficit in seven months in December 2021. In January 2022, it swung from
a $1.6 billion deficit in December to a $2.6 billion surplus.

2. ACCOMMODATION AND FOOD SERVICES-

In the aftermath of COVID-19, according to a Restaurants Canada poll of food service
establishments throughout the country, many are considering permanent closure. According
to the Hotel Association of Canada, hotel occupancy in Canada was less than 10% as of
March 21, 2020. According to the Tourism Industry Association of Canada, the tourism
industry might lose up to $6 billion per month and almost 778,000 jobs in total throughout
the pandemic. However, domestic tourist expenditure by Canadians contributes for 80% of
tourism economic activity in Canada, and this figure could rise if Canadians spend their
summer vacations in the country following the outbreak.

3. MOTOR VEHICLES AND PARTS-

Fig. Motor vehicles and parts Exports and Imports

Imports of motor vehicles and parts fell 13.9 percent in January 2021, more than offsetting a
6.8% increase in December 2021. Imports of passenger vehicles and light trucks decreased by
12.4%, owing in part to fewer imports from the United States. While several sites claimed
higher output in January 2022, manufacturers frequently prioritise pleasing the US market
before exporting to Canada. Imports of engines and parts (-15.4 percent) also played a
significant role in the drop. Canadian vehicle manufacturing normally recovers after the
holiday slowdown in December; nevertheless, it fell in January 2022, owing in part to supply
concerns, which explains the reduction in engine and part imports.

CANADA’s COVID 19 ECONOMIC RESPONSE PLAN-

The Government of Canada is taking significant action to assist people, businesses, and
organisations who are having trouble because of the COVID-19 outbreak through the
Canada's COVID-19 Economic Response Plan. The Prime Minister established a coronavirus
Incident Response Group, which has been meeting since the end of January, and a Cabinet
Committee on the government response to the epidemic on March 5. (COVID-19).
While the Canadian government has been concentrating on controlling the spread of COVID-
19, it has also begun concerted preparation to prepare for broader virus transmission and
reduce the effects of a hypothetical pandemic.

References

 https://link.springer.com/article/10.1007/s41885-020-00080-1#Sec18
 https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?
end=2020&locations=CA&start=2010&view=chart
 https://www.statista.com/statistics/1227759/canada-gdp-forecast/
 https://www150.statcan.gc.ca/n1/daily-quotidien/210302/dq210302a-eng.htm
 https://hillnotes.ca/2020/04/08/impacts-of-covid-19-on-selected-sectors-of-canadas-
economy/
 https://www.canada.ca/en/department-finance/economic-response-plan.html