Canadian Manufacturers and Exporters in its March economic update says the coronavirus has “pushed the world into recession” with global growth forecast to reach 0.4 per cent this year, according to CME’s chief economist Alan Arcand.
The report predicts a collapse in growth in the second quarter, followed by a rebound in economic activity over the second half of the year and into the next. This will allow global real GDP growth to turn positive and reach 3.9 per cent 2021.
While CME forecasts the U.S. economy will contract by 3.1 per cent in 2020, Canadian real GDP is expected to fall by 3.8 per cent this year, with the economy recovering and expanding by 3.2 per cent in 2021.
As an essential service, Canada’s manufacturing sector will keep humming through the government-imposed shutdowns but is set to post its biggest decline in output since the 2008 global financial crisis due to weak demand for certain products.
Manufacturing output growth will bounce back in 2021, in line with improving domestic and global economic conditions.
Once countries are able to scale back social distancing measurers, CME expects pent-up demand and government stimulus programs to spur activity.
“Manufacturing will be critical to Canada’s success in overcoming the COVID-19 crisis. This measure will help the industry,” Says CME’s president and CEO Dennis Darby. “It will also enable to economy to rebound faster once the crisis is over.”