Atlantic Canada’s Economy Not Hit As Hard As The Rest Of The Country
The Canadian economy has just experienced the sharpest economic slowdown on record because of Covid-19, and business owners are expected to experience financial distress. But there’s cause for hope in the Atlantic provinces.
The Business and Development Bank of Canada (BDC) sees a less severe economic impact in the region than the rest of the country because fewer Covid-19 cases meant provinces like New Brunswick and Nova Scotia didn’t impose a full-lockdown on non-essential businesses.
“We do see things starting to come back as the economy recovers,” said BDC President and CEO Michael Denham. “And I guess, the nice backdrop is the, there have been, compared to the rest of Canada, relatively fewer cases of Covid-19 in Nova Scotia and New Brunswick.”
He said the bank’s projections show about a 6 percent decline in GDP this year. That’s “slightly better” than the rest of Canada, he said.
Some sectors in the Atlantic provinces, like tourism and fisheries, have been hard hit by the health crisis. In Newfoundland, the oil and gas sector has also gotten hit.
According to the Atlantic Provinces Economic Council, the region’s accommodation industry lost $80-million in revenue in April, with more than of 7,500 layoffs.
Business investment intentions are also down 26 points in the Atlantic provinces, indicating that business owners don’t have confidence that the demand will be there to justify investments, and that many don’t have access to the cash resources they need to make investments.
Lower investments would dampen employment and construction for expanded or new facilities, among other things.
In the Maritime provinces, the tourism sector took the biggest hit, with employment down 37 percent between February and May. The manufacturing sector lost 16 percent of employment, construction saw a 15 percent loss, and retail and wholesale saw a 13 percent drop.
Atlantic Canada’s export markets are also hit harder than the rest of the country, particularly fish and seafood products, refined petroleum and lumber.
But Denham said things seem to be looking up for the fisheries sector.
“As we look ahead, we do expect there’s going to be more buoyancy and growth in fisheries,” Denham said.
“If we look at some of the forward pricing for fish products, it’s up about 25-to-30 percent from where it was six-to-eight weeks ago, and that’s a good leading indicator of better pricing environment and better demand.”
And with many of the manufacturing companies in Atlantic provinces being heavily oriented towards food processing, a sector that’s stayed strong due to its essential nature, “we anticipate that will also stay strong and grow,” Denham said.
The food-manufacturing sector saw both sales and new orders increase by 12 percent in March, according to the BDC.
Denham said as the region recovers, anything that helps the safe flow of people, like an Atlantic bubble, would help the economy.
It’s important that businesses try their best to be creative and find new ways to generate revenue when traditional sources have dried up. That’s “easy to say, hard to do,” Denham said. But he said, businesses should find ways to export and speed up their integration of digital and e-commerce offerings.
“Whereas exporting may have seemed like a nice-to-have in the past, I think the more you can connect to other markets the better,” he said.
Denham also said small businesses should take full advantage of financial and liquidity support programs, and be very disciplined in their cash-flow management.
“All companies should have multiple cash flow scenarios,” he said.