COVID-19 and rail blockades signal worst year for manufacturers since 2008 – CME releases economic outlook report

CME releases economic outlook report

OTTAWA (March 27, 2020) – A new report by the Canadian Manufacturers & Exporters details the effects of the COVID-19 crisis on manufacturing in Canada, showing the sector is expected to suffer its biggest decline this year since 2008, with output falling by 5.7 per cent.

Supply chain disruptions, the February rail blockades and an unprecedented drop in demand are driving this huge decline, according to the report by the CME’s economics team, which reviewed Canada’s economic performance up to March 2020.

“Our report shows Canada’s economy is entering a recession and that manufacturers, along with all other sectors will face a tough year,” said Dennis Darby, President & CEO. “Although manufacturers should remain operating through the government-imposed shutdowns due to their essential role in responding to this crisis, it will be at reduced levels because of weak demand for certain products.”

As the world settles into this new reality, many businesses are left wondering how to plan for the future. The report also looks forward, providing some guidance as to where the economy might be heading.

The CME’s economics team forecasts that a collapse in growth in the second quarter will be followed by a rebound in economic activity over the second half of the year and into 2021. This will allow global real GDP growth to turn positive and reach 3.9 per cent next year.

“At this stage, decisions by governments have a critical impact on how Canada will fare in pulling itself out of the recession caused by COVID-19,” added Darby. “Putting in place measures aimed at keeping Canadians employed and businesses open, such as direct wage subsidies through employers will ensure the economy can rebound quickly.”