The Bank Of Canada warns that the ongoing round of lockdowns will exacerbate the pandemic’s uneven repercussions in the labour market, penalizing first and foremost lower-income service-industry workers.
Canada’s economy contracted 5.5% in 2020 and the outlook is likely to be similar in 2021 as most provinces have been under some form of lockdown and these measures are likely to stay in place until the spring, with the largest deliveries of vaccines set to arrive in late March.
The Bank of Canada’s forecast is rather optimistic, predicting a 4% growth this year, a target likely to be missed if the current lockdowns remain for the months to come.
Economic activity and consumer spending would have to pick up very rapidly in the second half of 2021 to make up for the winter lockdowns, an outcome that is realistically unlikely.
Inflation is set to reach 1.7% in 2022 and 2.1% in 2023, while the already propped-up real estate prices in Canada may keep climbing up due to the low-interest-rate environment set to last for the coming years.
The pandemic is likely to keep making the rich richer and the poor poorer in 2021 as the recovery will be slow and contingent on an efficient vaccine rollout or a change in strategy.