COVID-19 lockdowns are wreaking havoc on businesses of all types here in Canada and around the world. Our country’s experience is illustrated in full colour by the March employment numbers: We lost as many jobs in one month as we did in nine months during the 2008-2009 global financial crisis, and almost one-quarter of Canada’s labour force was laid off or placed on reduced hours. Just weeks before, businesses were bemoaning a dire lack of skilled workers. The swift shift to layoffs was very reluctant, revealing how blindsided businesses were by the plunge in activity. While all businesses are impacted, are some affected more than others?
Some impacts are certainly more obvious than others. Those tightly wound into Chinese supply chains were the first to be hit. Airlines, accommodation, restaurants and all others caught up in business and consumer tourism were also hit fast and hard. But it didn’t take the lockdowns long to arrest broad swaths of business activity just about everywhere—so is it even possible to rank relative impact? EDC Economics studied the issue, and looked at four key factors: economic importance; pre-COVID-19 financial strength; the estimated need for liquidity; and the impact on sales as a gauge of urgency.
Considering all these factors, the results were largely unsurprising. Topping our list was the accommodation and food services category, given relatively poor financials, a high relative borrowing need and impact on sales. The oil and gas sector is a close second, together with arts, entertainment and recreation. Also, both the auto and aerospace sub-sectors of manufacturing were close to the top of the “need” rankings. Information and cultural industries and the primary agriculture, forestry and fishing categories rounded out the most-affected list...
This was excerpted from a 16 April 2020 article written by Peter G. Hall, Vice-President and Chief Economist, Export Development Canada.