Economists See Canada’s Economic Recovery Slowing: Poll

Forecasts for Canada’s economic recovery from Covid-19 are worsening.

A new poll of economists by Reuters has found that a majority expect the Canadian economic recovery from the Covid-19 recession will be significantly slower than previously thought, with a high risk that a resurgence of the disease will halt the current rebound.

Renewed lockdown measures this winter to limit the spread of Covid-19 would damage the recovery in the economy after it contracted at an annualized rate of 8.2% and 38.7% in the first and second quarters of this year, according to the survey.

The October 15-21 poll of 50 Canadian economists predicted that the economy expanded at a record annualized 44.5% in the third quarter, faster than the 30% growth predicted in July. But growth was expected to slow to 5% and 5.2% in the fourth quarter of 2020 and first quarter of 2021.

Those forecasts for the current quarter and early next year were significantly lower than the 10% and 7% economic growth that had been predicted just three months ago. Nearly 60% of survey respondents said the risk that a resurgence in Covid-19 cases would halt the recovery was either "high" or "very high."

The surveyed economists expect the Bank of Canada, which cut its key interest rate by a cumulative 150 basis points this year and implemented its first-ever quantitative easing program, to hold its benchmark overnight interest rate at 0.25% through the end of 2023.