Global trade patterns will be disrupted for a long time, forcing trade-dependent countries like Canada to become more self-sufficient even after the coronavirus crisis has passed, says the head of the country’s largest bank.

Royal Bank of Canada Chief Executive Officer David McKay painted a picture of a world that’s less connected after the pandemic during his speech at his company’s annual investors meeting. That will force adjustments on a Canadian economy that relies on open trade and an influx of newcomers.

“Global trade migration is not likely to go back to the old model. International movement won’t press a ‘resume’ button any time soon. Shoppers, diners and tourists may choose to stay away from each other for a while,” McKay said Wednesday in his prepared text. “These are significant challenges to grasp for a world that has largely benefited from globalization.”

Canada shouldn’t give up on globalization, he said, but the country must do more to stand on its own.

“We need to think about how to be more self-reliant in the areas that matter most to our competitiveness and prosperity,” McKay, 56, said. “This includes creating more resilient Canadian supply chains, using technology to work and connect differently with stakeholders and transforming the way we learn and train, so our companies and communities are better equipped for a new paradigm of disruption.”

Recession is certain

Canada was in the “later innings” of an economic expansion when the pandemic emerged, though the collapse of oil prices has compounded its challenges, McKay said. The impact of this crisis will drive the country into a recession, though how deep and how long of a downturn “is hard to see at this stage,” he said.

The country’s priority must be to help companies remain solvent and keep people employed, he said, adding that help is needed urgently -- in days and weeks, not months, McKay said.

“This will keep our economy primed, and help speed up the recovery once the health crisis is in check,” McKay said, while acknowledging efforts by Ottawa and provincial governments in responding with substantial measures to offset the magnitude of the fiscal challenges.

McKay highlighted the efforts by the Toronto-based bank to provide relief for customers during the pandemic. Those include:

  • Processing more than 250,000 payment deferrals for mortgages and other loans;
  • Working closely with “thousands” of entrepreneurs and business owners, including increasing operating lines of credit limits and waiving credit-card minimum payments;
  • Reducing credit card interest charged by 50 per cent for personal and small business clients receiving minimum payment deferrals;
  • Having wealth advisers reach out to “hundreds of thousands” of clients;
  • Working closely with capital-markets clients for financing needs

Royal Bank has also made substantial changes in its own operations, with more than 70,000 of its nearly 82,500-strong workforce working from home. That’s up from 4,000 just a month ago, McKay said.

McKay said he is “confident” about the road ahead for Canada’s largest lender, helped by diversified operations, strong capital and liquidity ratios.

“In the immediate term, our bank is well-positioned to manage through the downturn,” he said. “We have the stability and strength of one of the best-rated financial institutions in the world.”