Over the last few months, we have seen the devastating human toll of the novel coronavirus (COVID-19) as well as its impact on Canadian and global financial markets. To date, some of the hardest-hit sectors include retail, manufacturing, oil and gas, tourism, food, and accommodation. Along with the colossal economic slowdown, international supply chain crunches persist, and the global economy is likely to feel the reverberating effects of this pandemic for some time. With global output projections shifting rapidly and frequently, our current economic situation remains in a state of flux, and uncertainty about the broad and lasting impacts of the health crisis continue to fuel volatility in financial markets and upend corporate decision making.
COVID-19 emerged against a backdrop of a global and Canadian economy that was already struggling with shifting dynamics, falling commodity and energy prices, slow overall employment growth, and global economic uncertainty. To weather this multi-facetted storm, many businesses moved to carefully managing expenditures and discretionary spending. Although these approaches are pragmatic from the point of view of the business owner, these decisions also affect market liquidity. Responding to these shifts, the Government of Canada has recently implemented several rescue packages assisted by the Bank of Canada to expand lending facilities and offer liquidity to financial markets and businesses that face the very real possibility of insolvency.
The impacts in Canada—and especially on small- to medium-sized enterprises (SMEs)—have been nothing short of dire. Many are now navigating the prospects of shrinking demand, dwindling supply chains, reduced revenues, and an overly indebted financial landscape. Business continuity, financial sustenance, alternative supply chains, and operational resiliency are much-debated topics for many of these firms. At the same time, the market balance of digital industries is also shifting. Once lucrative retail electronics and hardware manufacturers are feeling the brunt, as consumers prioritize their finances, spending more on essential products and services, while businesses seek to preserve critical business lines and staff. In fact, even before the novel coronavirus was officially declared a global pandemic, supply chain crunches in China and warnings of a rapid international spread of the infection in February 2020 caused Apple to adjust its sales targets for Q1, a decision that caused Apple stock to subsequently drop by 4%.
Lockdowns, remote work, and social distancing have cast the digital economy into the spotlight. eCommerce, telemedicine use, and video game consumption have all gone up, and eLearning platforms, fintech solutions, and telecommunication services also saw a substantial surge in demand. Overnight, these changes have already highlighted the importance of digital adoption for many businesses. They have also tested the limitations of our academic institutions and underlined some of the shortcomings of the gig economy. Forecasting the course of this pandemic is far from certain, but recent ICTC research points to an expected double-digit percentage decline in Canadian economic output in 2020, followed by an expected rebound in 2021. Although such forecasts are based on several assumptions— including a second wave of the infection in the fall, the availability of a vaccine in 2021 or a move to universal testing in Canada—one thing is clear: the digital economy will become more important than ever.
This new reality is undoubtedly prompting businesses to innovate and rethink their value chains. An increased adoption of cloud computing, advancements in data analytics, and machine learning can generate efficiencies and boost productivity in a post-COVID economy. Many companies are considering the deployment of autonomous systems and even lights-out manufacturing to drive intelligent supply chains, along with opportunities for large-scale use of telemedicine and carbon-neutral energy generation.
While such jolts to our global economy are proving challenging, they also test our resolve, responsiveness, and ingenuity in the face of adversity. Larger questions about the efficacy and preparedness of our communication systems, health systems, education institutions, and trade and transportation networks will come to light, as will our ability to shape sustainable communities and a truly eco- friendly future. These are a few of the elements that will require an exceptional policy response in the coming months, paving the way for a robust economic recovery in Canada. The Government of Canada’s aid and stimulus packages have been a welcome relief for many businesses, and they are indeed needed to weather the storm in the short-term. Supporting long-term goals requires a reflection on lessons learned from the past few months and a focus on a recovery strategy that can help Canada emerge from COVID-19 in a clear and resilient direction.
This white paper highlights and addresses following topics as key pillars of Canada’s post-COVID economic future.
- Digital adoption and acceleration for Canadian SMEs
- Workforce development and preparedness
- Building resilient supply chains and focusing on trade
- Enabling a connected health system
- Building cyber resiliency
- Supporting a sustainable and carbon-neutral economy