Jack M. Mintz: Economic recovery from COVID-19 is going to take a while — but there is room for hope

As I hear about friends’ layoffs and I walk by shuttered stores, it is depressing to know that a tiny, invisible particle can induce a large-scale, medically induced economic coma. But while the immediate outlook is dim, there is room for hope. The immense effort involved in the current lockdown, combined with almost innumerable initiatives to devise treatments and vaccines, will reduce deaths and distress and — eventually — enable us all to return to work.

One recent forecast sees a decline in Canada’s GDP by fully 25 per cent in the second quarter, followed by a 30 per cent rise in the third quarter, a boom that would be spurred by extraordinary monetary and fiscal measures at both the federal and provincial level. This implies a return to relative normality by the end of the third quarter.

The first is that work won’t be conducted in the same way as before. In China, not all social distancing measures have been removed. There are new bans on international travel and new work-related health measures. Avoiding any future resurgence of the virus, including by quarantining the affected, will be the top priority. Chinese consumption has not yet fully snapped back, as people build up their savings for the next contingency.

Problem three: Canada is a commodity-based economy faced with a two-thirds decline in oil prices and roughly one-fifth declines in the prices of aluminum, mining, lumber and steel — although agriculture and gold have largely held up. Oil prices will recover only slowly as world inventories pile up. Manufacturing sales have declined, especially autos, Canada’s second most important export following energy.

Will luxury and other discretionary be slower or will the urge to excess be even stronger as we renormalize?

I can't believe you guys are already talking about recovery....

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