It’s still early in the coronavirus outbreak, but some economists are already forecasting that Canada will experience a recession this year due to the global pandemic.
Royal Bank of Canada (T.RY), for one, has issued a new forecast predicting that Canada will fall into a recession as the economy is weighed down by the impact of both the coronavirus and the plunge in oil prices.
Canada’s biggest commercial bank is forecasting that Canada's economy will grow at an annualized pace of 0.8% in the first quarter, but then contract in the second and third quarters of the year. Royal Bank is forecasting an annualized decline of 2.5% in the second quarter and 0.8% in the third quarter.
Its forecast is based on an assumption that the impact of the virus will run its course by the end of the first half of the year, but an economic recovery will be prevented by persistent low oil prices. Royal Bank expects the economy will pick up momentum in the fourth quarter.
Similarly, Alan Blinder, a former U.S. Federal Reserve Vice-Chair who now serves as an economics professor at Princeton University, said in media interviews that "It would be a miracle if Canada doesn’t have a recession, but we shouldn’t bank on miracles… I think the U.S. is certain to have a recession, in fact, I think we’re already in it. Data lags by months so we won’t know until June what the March economy will be like, but you can, to some extent, see it with the behaviour of consumers.”
