Continued Business Supports Needed as Economy Contracts in Q1

The Chief Economist and

Vice President of Policy at the Canadian Chamber of Commerce, Dr. Trevin Stratton, issued the following statement recently on the Bank of Canada’s Monetary Policy Report.

“As 2021 begins, Canada still faces powerful headwinds. COVID-19 numbers are up, restrictions on our activities remain and may even increase, and we face great economic uncertainty.

“After a significant rebound in the second half of 2020, Canada’s economy once again faces a setback as it will contract by 2.5% in the first quarter of this year, according the Bank of Canada’s latest projections. This marks the first quarterly contraction since the first wave of the pandemic in Q2 last year.

“We will likely be in this

Trevin Stratton phase well into March, when we expect the lockdowns to be eased across the country. During this period, we need to provide the right kind of support to individual Canadians and to businesses to get them through the lockdowns, recognizing that neither group is in the same financial position as it was in March 2020.

“We need to ensure that both individuals and businesses can make it safely to the other side of the river. That means continuing programs like the Canadian Emergency Wage Subsidy, safely reopening schools and ensuring that there is available childcare so people – particularly women — can return to work once restrictions are eased. It means improvements to rental subsidy programs and targeted support for the hardest hit sectors.

“It will be important to understand that most small businesses can’t afford to take on more debt after all that they have accumulated over the last nine months. Indeed, even the tax and fee deferrals governments brought in last year, which have been so important, are in fact low-cost loans. They will still have to be repaid.