Canadas New Lockdowns Could Halt Recovery, Cost Up To 200,000 Jobs: Forecasts

The new restrictions on business activities announced by provincial governments amid a second wave of COVID-19 will take a bite out of the economy just in time for the holidays, new economic forecasts predict.

The country’s recovery from the spring shutdowns could grind to a halt in December, economists at Royal Bank of Canada said in a report issued Tuesday. 

“All told, we judge that the measures that have been rolling out since early October could clip Canadian quarterly growth by as much as 5 per cent (annualized), leaving growth as low as zero for Q4,” RBC economists Robert Kavcic and Shelly Kaushik wrote.

With many service-oriented businesses shut down, the recovery in jobs that started this summer will reverse in December, predicted Stephen Brown, senior Canada economist at U.K.-based Capital Economics.

Watch: These jobs will likely suffer the most in 2021 because of COVID. Story continues below.

“The fall in restaurant visits since October implies accommodation and food services employment will fall by a further 150,000 to 200,000 by the end of 2020,” he wrote in a client note Tuesday.

Job listings websites are showing a continued recovery, suggesting “there will continue to be gains elsewhere, but our forecast for a renewed fall in employment in December implies 670,000 people will be out of work compared to a year earlier,” Brown wrote.

Based on the latest announced restrictions, Manitoba and Quebec will see the biggest hit to their economies from the second wave, RBC predicted, with Ontario close behind.

Ontario announced the closure of non-essential in-person retail and closed restaurant dining rooms in Toronto and Peel Region as of Monday. Quebec shut indoor dining, gyms and other activities around Montreal and Quebec City in early October. Manitoba shut all non-essential in-person retail as of Nov. 20.

A risk to small businesses

Some business groups have been critical of the latest wave of shutdowns, warning that many small businesses which barely survived the first COVID-19 wave could be finished off by the second wave. The new lockdowns unfairly advantage the big box retailers, they argue.

“We’re closing down the little flower shop, but, well, you can buy your flowers at Costco,” Dan Kelly, head of the Canadian Federation of Independent Business, told CTV News Channel on Sunday. “We’re closing down the small lighting store that I visited last night in north Toronto, but you can line up at Home Depot any time to get your lights. It is nuts.”

“They’re still going to allow all the big box stores to sell non-essential goods (in Ontario), competing directly against those small businesses that are now forced to close their doors entirely. That’s just not fair.”

Manitoba has banned the sale of non-essential items in big-box stores, copying a policy adopted in some U.S. states and European countries.

But business groups would rather see restrictions lifted on smaller businesses. The CFIB has called on Ontario to reverse some of its latest restrictions, including allowing in-store retail, “but with very limited capacity for customers and public-facing staff.”

Under the CFIB’s plan, small retailers would be limited to three customers at a time, and no more than three customer-facing employees at a time. 

RBC’s economists said the second wave would not impact the overall economy as heavily as the first, because many businesses have learned to adapt, consumers have shifted their shopping habits, and “generous federal support programs are already in place, and well understood.”