Every week during the coronavirus crisis, CCDF will be providing its clients with an economic update to help them understand the wider economic implications and better plan their own recovery.
This week, we focus on Saskatchewan’s economic prognosis and new business supports.
How much longer? Relatively good news on the public health side keeps coming in. Saskatchewan’s number of active cases have continued to decline from their peak on April 5. Projections for total cases, hospitalizations and deaths are all much lower than they were even two weeks ago. And cases in Canada overall will likely peak in the next week, rather than in late May as once estimated. This means the recovery phase will come sooner rather than later. However Premier Moe has declined, as of writing, to set a timeline for reopening Saskatchewan businesses.
What are the prospects for the Saskatchewan economy? As the pandemic curve flattens in Saskatchewan and Canada, analysts can more accurately estimate the impacts of COVID-19 on provincial economies. A few assessments came out this week.
- The Conference Board of Canada released an outlook for each province on April 15. They expect Saskatchewan will face a decline in GDP of 5.0% for 2020, rebounding by 5.4% in 2021, followed by relatively strong growth for the next three years. Saskatchewan’s situation is complicated not only by the pandemic but also low potash demand, collapsing oil prices and Chinese restrictions on canola. Unemployment in the province will hit 8.7% by the end of 2020, strengthening to 6.7% by 2021. Their projection for Canada as a whole shows unemployment of 8.8% by the end of 2020 and 6.6% in 2021. Real GDP will decline by 4.3% in 2020, before rebounding by 6.0% in 2021.
- RBC provided its latest provincial economic outlook on April 13. It forecast that Saskatchewan’s real GDP would decline by 5.2% in 2020, and only grow by 2.0% in 2021. Similarly, unemployment would drop to 10.9% in 2020, recovering only modestly to 9.2% in 2021. At the national level, RBC estimates Canada’s real GDP will drop 4.9% in 2020, and only grow 3.4% in 2021. It forecasts national unemployment to hit 10.0% in 2020, recovering to 7.6% in 2021.
- CIBC and TD have not released provincial outlooks recently, however they have provided new forecasts for the Canadian economy. On April 20, TD released an outlook anticipating a decline in national real GDP of 7.5% in 2020, before rebounding by 7.3% in 2021. Similarly, they predict unemployment will hit 9.4% in Canada this year before improving to 6.0% in 2021. CIBC estimated on April 16 a decline in real GDP of 6.9% in 2020, recovering in 2021 with 6.8% growth. It saw unemployment falling to 10.3% in 2020 before improving to 8.3% in 2021.
The Government of Saskatchewan put forward its own projection on revenue and economic impacts, with multiple scenarios depending on the rate of recovery of oil prices. Finance Minister Donna Harpauer noted that the coming deficit is due to pandemic-related economic restrictions, not structural issues, and that the state of Saskatchewan’s finances are still in relatively good shape. While the province will need to borrow to cover shortfalls for a few years, it maintains a AAA credit rating, and so interest rates for its deficits will be low.
When can I access the Canadian Emergency Wage Subsidy (CEWS)? The federal government announced a 75% wage subsidy on March 30 as a means to discourage layoffs, but details on when and how businesses would access the funding have been slow coming. With the Canadian Emergency Response Benefit (CERB) now operational, attention has finally been dedicated to building the application process for the CEWS.
The Liberal government announced yesterday that it will start processing applications on Monday, April 27, with funds expected to flow within days. It is expected that 90% of applications will be processed by May 5.
An online subsidy calculator and application details were released on April 21. You can now determine how much money you will be eligible for under the CEWS program through an online tool.
What is the new Indigenous Business Fund going to do? The federal government also announced $306 million in dedicated support for Indigenous businesses on Saturday. Application details are still to come, but we know is that it will consist of short-term, interest free loans as well as non-repayable contributions, targeted at Indigenous businesses unable to access the government’s existing COVID-19 support measures.
The funding will be provided through Aboriginal Financial Institutions including CCDF. CCDF will provide more details on eligibility and application as they are developed.
How can my business adjust to the new economic reality in Saskatchewan? CCDF is offering all of its clients up to $10,000 for professional assistance, through its Business Support Program, to navigate these difficult times, and has retained a number of consultants to help you with your specific needs. Areas of support include assisting clients with addressing HR issues, acquiring economic intelligence, obtaining financial management advice, and more. Call your CCDF Business Development Specialist to access this program right away, and better understand what supports and strategies will work best for your circumstances.
What are some good resources to learn more? Morris Interactive has compiled a list of free resources that will provide up to date economic information during the coronavirus crisis. You can view those resources here.
Document Prepared by Morris Interactive
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