Conference Board says unemployment will rise

March 23, 2020, Ottawa, Ont. – The Conference Board of Canada (CBC) has released an alternate scenario forecast that describes the economic implications if social distancing continues until the end of August, both in Canada and the United States.

In the scenario, real GDP is forecast to fall by 1.1 per cent in 2020, instead of growing by 0.3 per cent as in an earlier baseline forecast.

“These are extraordinary times. Canadian leaders, business owners and households are facing unprecedented uncertainty,” CBC chief economist Pedro Antunes, said in a press release. “If this scenario holds true, we can expect a deeper and longer-lasting hit to the Canadian economy. Still, governments have acted swiftly to mitigate health and economic impacts, once COVID-19 is contained, the economy will rebound.”

In the alternate scenario, the CBC suggests that:

• Government transfers to people, lower interest rates, and other measures to increase liquidity will help stave off household and business bankruptcies – keeping Canada’s financial institutions in relatively good shape.
• Real eastate markets will cool significantly from the frothy activity reported in February, but new home construction is expected to hold up through the downturn.
• It is estimated that the economy could shed over 330,000 jobs over the second and third quarters of 2020, boosting the unemployment rate to 7.7 per cent.
• Industries servicing tourism, household services, and resource sector construction will be hit hard. Many of them will suffer double-digit declines in the second and third quarters.
• A consumer-led recession in the United States is assumed, with real GDP declining by 1.1 per cent. With diminished demand from Canada’s most important trading partner, Canada’s real exports of goods and services are forecast to decline by 2.1 per cent in 2020.
• With the COVID-19 pandemic contained by September of this year, a rebound in household spending is forecast to occur in the fourth quarter and into 2021.
• Pent-up consumer demand will help economic activity rebound, with real GDP growth of 3.3 per cent forecast in 2021.

The CBC is an independent, non-partisan, and evidenced-based applied research organization.