Vaccine Set to Make Up for 2nd-Wave Virus Hit to Canada’s Economy

The rising number of Covid-19 cases in Canada will only delay the country’s rebound and isn’t likely to have a permanent impact on medium-term growth, according to a Bloomberg survey of economists.

Canada’s gross domestic product is expected to grow 2.6% on an annualized basis in the six months through March, down from a previous forecast of 3.3%, the monthly survey showed. That will be fully offset by stronger growth starting in the second quarter.

The forecasts suggest mass vaccinations next year will reinvigorate a rebound that’s stalled because of the second wave of Covid-19 currently besetting the country. Household consumption, which will take a hit from new regional shutdowns to control the spread of the virus, especially in the country’s financial capital Toronto, is now seen returning more strongly in the second half of 2021.

Canada will begin its Covid-19 immunization campaign this week, with inoculations Monday in Quebec and Ontario. Widespread vaccination against the virus will begin early in 2021, and a majority of Canadians should be inoculated by fall next year, Prime Minister Justin Trudeau said late last month.

Economists see GDP expanding by an average 5.4% annualized in the final three quarters of 2021, significantly higher than the 3.8% average in the November survey.

Still, investment remains a concern. Economists slashed forecasts to an average drop of 1.7% annualized over the next six months, from a gain of 5.5% previously.

©2020 Bloomberg L.P.

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