Business executives are just not feeling it. Economies may be opening up and stock markets are rallying, but business leaders across Canada and the wider world are less confident about their prospects and are hunkering down for a prolonged recession, according to a new survey by Oxford Economics.
The dim outlook comes as the S&P 500 index rallied above 3,000 points this morning for the first time since March 5. The market has rebounded 34 per cent since it fell to a year-to-date low of 2,237.40 points on March 23.
“We found that business pessimism has continued to rise. More than half (61 per cent) of businesses have become more negative about global growth prospects in the next two years, with just 24 per cent now more positive,” according to the survey, which gauged the response of companies that collectively employ around six million people and have a turnover of US$2 trillion.
Nearly all businesses (89 per cent) expect to be negatively affected by the pandemic, with one-third expecting the effects to be persistent. The proportion of respondents expecting to be very severely affected has halved over the past month to 12 per cent, however.
“This might suggest that fears over the worst outcomes for the global economy have abated over the past month, as some countries have taken tentative steps to ease restrictions and governments and central banks have continued to signal their willingness to support their economies,” the survey noted.
More worryingly, three-quarters of businesses expect the global recession to last longer than Oxford’s own baseline view of two quarters.
“A global recession lasting three quarters remains the most common expectation. But an increasing number of businesses expect a lengthier recession, with almost a quarter (23 per cent) expecting the recession to last longer than four quarters and into 2021 (compared to 15 per cent who felt that way in April),” the survey noted.
Around 45 per cent of the executives surveyed expect a U-shaped recovery, but a significant 23 per cent are also forecasting a W-shaped recovery in which growth weakens as the pandemic returns.
“More businesses are now anticipating an L-shaped recovery (16 per cent, up from 10 per cent), with growth below trend for a protracted period. Just 8 per cent of businesses expect a relatively quick (V-shaped) return of growth to trend,” the survey concluded.
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COVID-19 RUINS RETAIL: A retailer in Montreal gets his clothing shop ready for the opening after being closed for nearly two months. After a preciptous drop in March, sales fell further through April, the first full month of the economic shutdown in Canada. An advance estimate from Statistics Canada expects a 15.6 per cent sales drop in April compared to March, though the agency suggested that figure could change, writes Jake Edmiston.THE CANADIAN PRESS/Paul Chiasson
- The Parliamentary Budget Officer will release its new report entitled ‘Reporting of Gains and Losses in the Government’s Financial Results’
- Senate Committee on National Finance to hear from the Parliamentary Budget Officer (PBO), Yves Giroux, on the government’s response to the COVID-19 pandemic and its economic consequences
- The Parliamentary Budget Officer’s testimony, the committee will hear from Bank of Canada Governor, Stephen Poloz, beginning at 5 p.m. ET
- Canada Pension Plan Investment Board Q4/2020 results release
- Cogeco Communications presents at virtual RBC Capital Markets telecommunications and media conference
- TMX Group Interim CEO and CFO John McKenzie to participate in virtual fireside chat at the the Deutsche Bank Financial Services Conference
- Notable Earnings: National Bank of Canada, Scotiabank, West Fraser Timber Co. Ltd
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Rail blockades, disruptions in global supply chains, prolonged trade tensions and, more recently, measures put in place to contain COVID-19 were all factors that impacted international trade and exporting businesses in the first three months of 2020, according to Statistics Canada.
As these recent measures have been extended, it is expected that the impact will continue to be reflected in the months to come.
“The number of Canadian enterprises exporting goods abroad slowed in 2020 compared with 2019. On a year-over-year basis, declines were observed in January and February, and intensified in March,” the agency said. “There were 19,706 enterprises exporting goods outside of Canada in March, a decrease of 10.7 per cent compared with March 2019. For January and February, the declines from 2019 to 2020 were around 5 per cent.”
Some seniors have experienced significant financial challenges during the COVID-19 pandemic, from the increased costs associated with home delivery for groceries and take-out meals, to the drop in the value of retirement portfolios as a result of recent market volatility.
Seniors hit hard financially by the pandemic are getting some additional support with the potential for more later, writes Jamie Golombek, managing director, Tax & Estate Planning with CIBC Private Wealth Management.
Today’s Posthaste was written by Yadullah Hussain (@Yad_Fpenergy), with files from The Canadian Press, Thomson Reuters and Bloomberg.
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