The COVID-19 pandemic has not only had repercussions on the social life of the population, it has also greatly impacted the Canadian and Quebec economy.
And for a rare time in history, governments willfully triggered a recession to protect citizens.
Aid programs for businesses and individuals, historic unemployment rates and unprecedented debt for governments, the pandemic has taken a toll on the economy.
“I could not have invented a recession with a dynamic like we are currently experiencing. It was the worst recession in modern history in terms of loss of economic activity, ”said Stéphane Marion, chief economist of the National Bank.
Even the New York Stock Exchange will be no exception. In March 2020, the Krash is major: in one month the stock market loses 30%.
More locally, it is the restaurants, factories and businesses that have suffered. In an attempt to save lives and limit the spread of the virus, the government is asking them to shut down. We deliberately suffocate the economy to avoid the worst.
“We were as destitute as the population. We reacted as we went along. It feels bad as a person to see so many people impacted and not necessarily always have the solutions. We worked as best we could under the circumstances, ”agrees the Minister of the Economy of Quebec, Pierre Fitzgibbon.
The province quickly realizes that without help, the economy will collapse.
“People who were asking for direct help, what we said was ‘for now let’s give cash, let’s make loans’. Indeed, loans are not perfect. I think people realized that you have to be careful too. If we had been too quick on our interventions, it would be billions that we would have given. We had to keep a little reserve, ”adds Mr. Fitzgibbon.
The Minister thus wanted to keep a balance between the ecosystem and public funds.
In the months that follow, Ottawa and Quebec will set up financial assistance programs to maintain this balance as best they can. PCU, CUEC, PACME, PAUPME, PACTE, PCRE, PCREPA, etc., the Canadian and Quebec economy are quickly put on artificial respirators.
On March 25, 2020, the former Canadian Minister of Finance, Bill Morneau, amounts to 52 billion in aid to the population.
“We have to do whatever it takes and we will do whatever it takes over the next few days and weeks,” said Treasury Board President Jean-Yves Duclos the same day.
“Everyone must understand the urgency of helping individuals and businesses alike,” declared the Premier of Quebec, François Legault, on April 8, 2020.
The programs put in place will make it possible to replenish the portfolio of the unemployed and businesses.
“Had it not been for budgetary, monetary, synchronized, planetary stimuli, the recession would have been much more painful,” said Stéphane Marion.
But what is the price to pay for its aid programs? Quickly, the critics fuse. Too generous, the programs discourage the unemployed from returning to work.
“PKU responded to a need that was evident at the start of the pandemic. (…) It is certain that over the passage of time, it has had a bit of perverse effects because it has become a bit of a disincentive to work for several people, ”explains the Minister of Work of Quebecois, Jean Boulet.
The paradox in this pandemic: despite the recession, taxpayers still manage to get richer, their debt is decreasing.
“We noticed that this is the first recession in history where households have not experienced a negative wealth effect. This is the first time in a recession (where) the price of houses has appreciated and the price of financial assets, and therefore the stock market, very very quickly regained the lost ground, ”says Mr. Marion.
Due to the explosion in house prices, it is estimated that households have become richer by more than 4%
“I would never have believed that, because I would never have believed that we would have injected so much government money into the system. (…) The total dollar volume of 400 billion is incredible, ”judges Emilio Imbriglio, CEO of the firm Raymond Chabot Grant Thornton.
One year later, while the COVID-19 vaccination campaign is underway, Canada and Quebec can see an economic recovery.