Hamilton GDP projected to drop by 3.2%
Forecasted decline would mark the first contraction in Hamilton’s economy since the 2009 recession
The Hamilton metropolitan area’s real gross domestic product is expected to decline by 3.2 per cent due to COVID-19 this year, a rate sharper than both Ottawa and Toronto, according to a just-released report by the Conference Board of Canada.
The projected drop would mark the first contraction in Hamilton’s GDP since the 2007-09 recession. It would also come after a five-year stretch that saw the city post an annual average GDP growth of 2.7 per cent between 2014 and 2019.
The board’s report, which was completed April 24, forecasted key economic indicators of 13 major Canada cities from 2020 through 2024.
All areas are projected to suffer dramatically from the coronavirus crisis.
The hardest-hit markets are Edmonton and Calgary, whose GDPs are forecasted to plummet 5.6 per cent and 5.5 per cent, respectively, amid low oil production and heavy impact to the price of crude. Toronto and Ottawa’s GDPs are expected to drop 3.0 per and 2.4 per cent, respectively.
In Hamilton, the industries most affected by the pandemic are projected to be the arts, entertainment and recreation sector, the accommodation and food sector, as well as the transportation and warehouse sector.
Output in the arts, entertainment and recreation industry is poised to contract by 17.6 per cent, accommodation and food by a whopping 40.4 per cent, and transportation and warehouse by 10.4 per cent. Retail sales are forecast to fall by 3.3 per cent and retail trade output by 3.8 per cent.
Meanwhile, the region’s labour market is poised to decline by 2.0 per cent for a loss of over 8,500 jobs, pushing the unemployment rate up to 7.4 per cent. Hamilton already lost a staggering 18,000 jobs between March and April.
According to a survey commissioned by Hamilton’s economic recovery task force in mid-April, almost 13,000 jobs have been lost since the outset of the pandemic, representing a city-wide decrease of 35.8 per cent.
The survey targeted 1,040 local business over a nine-day span.
More than 90 per cent of respondents reported a decrease in revenue due to COVID-19, with half indicating that the drops in cash flow were greater than 50 per cent relative to March. Approximately 30.1 per cent are seeking additional loans or lines of credit.
Concerning measures that the respondents are taking to mitigate the fallout from COVID-19, 2.8 per cent of business have permanently closed while an additional 10.7 per cent said they are considering closing in the next 30 days.
About 38.5 per cent of respondents have temporarily closed their business; 40.8 per cent have moved to a no-contact pickup or delivery service model; and 63.3 per cent have worked remotely.
The silver lining to Hamilton’s sudden economic downturn is it’s set for a big rebound in 2021, according to the board’s report, which cites financial aid from federal and provincial governments as a driving factor to market growth.
The region’s GDP is forecasted to jump 6.0 per cent — tied for the third-highest rate of growth in Canada, behind only Vancouver (6.5), Edmonton (6.2) and Toronto (6.2) — next year. Employment is expected to rise by 2.9 per cent and personal income per capita by 2.6 per cent.
“Leading the way will be the accommodation and food; arts, entertainment, and recreation; transportation and warehousing and information and cultural industries, with double-digit output expansions expected from all four,” the report states.