Rebound forecasts depend on vaccine rollout: economists

Chief economists from Canada's big banks expect the economy to rebound this year, but say failing to control COVID-19 or get vaccines into arms could upend that recovery.

Speaking at an annual breakfast hosted virtually by the Economic Club of Canada on Thursday, economists expressed cautious optimism about the months ahead.

“We believe that virtually every economy will see a substantial improvement over the next year,” said Doug Porter, chief economist at BMO Financial Group.

His bank is expecting the global economy to post a 5.5-per-cent rebound this year, followed by a four-per-cent growth rate next year. But letting COVID-19 remain unruly can threaten all that, he said.

If the virus continues to accelerate, restrictions, including Quebec's new overnight curfews, will likely be expanded and wreak havoc, he warned.

“The risk is that these restrictions last even longer and do lead to an outright decline in activity in a number of major economies in the first quarter,” Porter said.

There may also be risks for economic progress if mutations of the virus detected in the U.K. or South Africa spread widely in Canada or the country continues with its “disappointing slow” rollout of COVID-19 vaccines, he said.

Vaccines were also on the mind of Avery Shenfeld, chief economist at CIBC. Late last year, he said Finance Minister Chrystia Freeland asked banks and economists how to unleash the savings Canadians are sitting on and stimulate spending again. The answer, said Shenfeld, is “hit me with your best shot.”

“Give us the vaccine and get out of the way because people are dying to go to restaurants again, but they're just not willing to die to go to a restaurant,” he said.