City’s economy forecast to shrink 4.9%

Saskatoon is expected to take a bigger economic hit during the COVID-19 pandemic than almost every other major city in the country, according to the Conference Board of Canada.

The local economy is expected to contract 4.9 per cent this year, a loss representing around $1.1 billion in productivity, the Ottawa-based think tank said in a report published Tuesday.

Most of that collapse is expected in the second quarter of the year, during which the city’s $22.4-billion gross domestic product is forecast to slide by almost $1.5 billion.

“Essentially, what we’re talking about here is the worst contraction in the economy that we have seen since comparable statistics have become available,” said Conference Board economist Todd Crawford.

“We know that we’re living through a period of extraordinary economic pain and public health pain right now, and there’s really not much anybody can do about it,” Crawford added.

Saskatoon is forecast to suffer more than most other cities because its economy was already “lukewarm” before the twin blows of government-ordered closures and collapsing commodity prices.

The Conference Board’s economic models project the local job market will shed around 7,100 positions this year; Saskatchewan has already shed almost 74,000 jobs since the pandemic began.

Net migration to the city is expected to be cut in half this year.

The good news, Crawford said, is that the rapid contraction is expected to be followed by a rapid recovery — provided the spread of COVID-19 can be contained and the economy can reopen.

“The recovery will be swift, because as businesses start to open again there is going to be some pent-up demand … As the economy reopens, we’re going to see a surge in economic activity,” he said.

Other concerns remain on the horizon, however. While Crawford said he does not expect the pandemic to fundamentally transform the resource-reliant local economy, confidence is key.

That will largely depend on the recovery of the American economy and new resource industry infrastructure projects such as pipelines pushing commodity prices back up, he said.

The Conference Board’s projections were completed on April 24, before the provincial government announced a massive $2-billion economic stimulus package.

Saskatoon is expected to receive between $32-$34 million from the province to fund infrastructure projects aimed at offsetting some of the effects of the pandemic.