It will likely take two years to get back to where we started: BMO CEO
The Canadian economy will not return to pre-COVID levels until the end of next year, according to the head of one of the country’s largest banks.
There might be a five-to-six-per-cent contraction over the course of this year, but the economy will recover that lost ground by the end of 2021, said Darryl White, chief executive officer of BMO Financial Group, in an interview with BNN Bloomberg’s Amanda Lang Wednesday
“As we move into the fall and we think about a second wave and then we think about the performance of economies over the course of the next year and a half, here’s what I tell you: I think we’re going to roundtrip to zero but it will take us to the end of 2021 to do that,” White said.
“What that really means is, you’ve spent two years getting back to where you started and you’ve left four or five per cent of cumulative GDP on the table. That’s not a great thing,” he added.
White also cautioned that unemployment will be “a little bit higher” by the time the economy breaks even, and that the recovery will be “choppy and uneven.”
He said he expects larger businesses will have an easier path to recovery than smaller ones because they have more access to capital. He noted that the federal government’s Canada Emergency Business Account, which so far is still restricted to larger businesses amid delays with the program’s expansion, has over 700,000 recipients.
So there is “quite a bit of protection there” when it comes to large businesses, White said. But there is “a lot more risk” with smaller businesses.
White also said there will be disparities in the recoveries of different sectors. While the hospitality industry will struggle, other sectors like grocery, distribution, health care and home improvement are set to thrive, he said.
“There will be a lot of positive performance through this, as well.”