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“With cases and hospitalizations surging across Canada, the second wave of the pandemic threw a bucket of cold water on the economic recovery. Many businesses already weakened by the first bout of the crisis will find it harder to survive the second wave,” said Ksenia Bushmeneva, economist at TD.
“While the eventual ramp up in vaccine distribution offers hope of a strong economic rebound in the second half of the year, the economy is entering 2021 on a wobbly footing and could suffer a modest contraction in the first quarter.”
Many businesses already weakened by the first bout of the crisis will find it harder to survive the second wave
Ksenia Bushmeneva, economist at TD
Despite expectations for a solid recovery from next quarter — primarily backed by vaccine optimism — the economy was forecast to grow 4.4 per cent in 2021, the weakest prediction for the year since January 2020.
Still, nearly 70 per cent, or 16 of 23 economists who replied to an additional question said Canadian GDP would reach pre-COVID-19 levels “within a year.” Five said “within two years” and two said “two or more years.”
“We expect Canadian GDP growth will pick up in Q2 and the following quarters as vaccine distribution ramps up, allowing for a more sustained easing in containment measures as 2021 progresses,” said Josh Nye, senior economist at RBC Economics.
Meanwhile, the unemployment rate, which edged up in December to 8.6 per cent, was expected to slow to 7.0 per cent and 6.2 per cent by end-2021 and end-2022, respectively. If realized, that would still be above the pre-COVID-19 levels of around 5.5 per cent.