A special survey conducted by the Bank of Canada has found that Canadian businesses are bracing for a long-term economic hit from the worldwide coronavirus outbreak.
Canada’s central bank said it called 52 firms and 11 industry organizations between March 13 and 17 as part of a special consultation to better understand the quickly evolving economic impacts of COVID-19. The survey found that the accommodation, food services and recreation sectors have already seen demand collapse during the coronavirus outbreak while other sectors are still bracing for a sharp downturn.
"The impact of the shock on firms was still escalating, with some firms seeing very recent sharp declines in demand and others only expecting them," said the Bank of Canada in a news release.
The central bank lowered its key overnight interest rate three times in March and it now stands at 0.25%. The next interest rate decision is scheduled for mid-April.
Non-food retailers reported "a dramatic drop in foot traffic" and said they were scaling down their operations due to declining cash flow, the bank said, while some manufacturers said they expected reduced demand and were anticipating temporarily shutting down their operations as well as reducing their workforce.
Other firms, like those tied to housing construction, said they had not yet been affected by the coronavirus shock. Grocery retailers and related transportation services noted their sales had reached new highs.
Meanwhile, a separate special survey by the central bank of energy companies on the impact of low oil prices found most businesses view the current price shock as worse than declines seen in 2008 or 2015 as access to financing has been more difficult. The survey of 27 oil and gas companies was conducted between March 12 and 18.
