COVID-19 and the Canadian Economy
Many countries have been seriously affected by the coronavirus pandemic, and Canada is sadly not an exception. Restaurants, stores, factories, offices, universities, schools, and kindergartens have been closed and people ordered to stay home. The country lost some 1 million jobs in March alone, and the unemployment rate skyrocketed to 7.8 percent. This is an increase by 2.2 percent compared to February when the rate was at 5.6 percent.
According to data by Statistics Canada, about 1.3 million Canadians were forced not to work during the period 15 – 21 March. Some 800,000 people worked reduced hours because of the pandemic. The job rate saw a drop across Canada but provinces such as Quebec, British Columbia, Alberta, and Ontario have been more seriously affected. The food services and accommodation sectors are the hardest-hit by shutdowns, restrictions, and social distancing measures. CIBC Senior Economist Royce Mendes also reported that the education and retail trade sectors have been affected and will face more serious declines in April.
The government already provided financial assistance in the form of deferred taxes ($55 million) and financial support for companies and individuals ($52 million). Under the Economic Response Plan, businesses that experienced a decline in gross revenue are entitled to receive subsidies amounting to 75 percent of wages. All businesses that saw a decline are eligible to apply for subsidies, regardless of size. The Canada Emergency Wage Subsidy program will end on June 30, 2021. In addition, 100 percent refund is offered for contributions to the Quebec Parental Insurance Plan, Quebec Pension Plan, Canada Pension Plan, and Employment Insurance.
Other measures have also been introduced in support of businesses, families, and individuals. One-time payment will be offered to modest- and low-income families and individuals. The average payment is at about $600 for families and $400 for individuals. Mortgage assistance is also offered by Canadian banks to help borrowers cope with financial hardship. Banks are now able to defer principal and interest payments for a period of 6 months. CMHC and other insurers extended a set of tools to financial institutions to help borrowers experiencing financial problems. Among them are special payment arrangements, capitalization of expenses such as outstanding interest arrears, loan re-amortization, and payment deferral. Support for indigenous people is available through the Indigenous Community Support Fund.
In addition to wage subsidies, businesses are offered support in the form of credit and deferred payments. Businesses are permitted to defer income tax payments for after August, 31. The option to defer payments applies to both instalments and outstanding balances. Businesses will not be subject to penalties and interest that normally accumulates. Financial assistance for self-employed individuals is also available in the form of deferral of custom duty payments and sales tax remittance, the Canada Emergency Response Benefit, and other measures.
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The government also offers financial assistance across industries, including broadcasting companies, airports, aquaculture, fisheries, and agriculture. The airport authorities in Canada are now permitted not to pay rent to the government. Food processors and producers and agribusinesses are eligible to apply for credit through Farm Credit Canada, and additional $5 billion have been made available. Other programs under which industries may be eligible include the Canada Emergency Business Account, Business Credit Availability Program, and Work-Sharing Program. Interest-free financing is available to non-for-profit organizations and small businesses through the Canada Emergency Business Account. They can apply for financing of up to $40,000.
While emergency measures have been implemented to help individuals and industries, plans for economic recovery must also be developed and implemented across Canada. The government of Ontario, for example, established the Ontario Jobs and Recovery Committee to aid economic recovery once the outbreak ends. The main task will be to ensure that people are back to work and businesses resume activities. Restrictions, however, will be lifted only after the curve begins to flatten.
While Covid-19 vaccine is still not available, some 80 research institutes and companies around the world are actively working toward developing a vaccine. Among them are Inovio Pharmaceuticals Inc., Novavax, Moderna, and others. Human trials have already begun in an effort to slow the spread and return back to normalcy, and there are some promising results.
One of the main problems is that once an effective vaccine has been developed and approved, a huge quantity of doses will be needed. The majority of companies lack the required production capacity. Another problem is that creating a safe and effective vaccine is only the first step to developing a global immunization strategy. It may be difficult to identify which groups must be prioritized. In the United Kingdom, during a flu pandemic, at-risk groups include pregnant women, children, social care workers, and healthcare professionals. Another problem is that poor and fragile countries with weak healthcare systems are usually the most affected. This means that some countries would lack the purchasing power to buy the needed number of vaccines. Some analysts also warn that major vaccine-producing countries such as India may use their production capabilities to ensure that their citizens are protected and then start exporting.
The World Health Organization works in collaboration with vaccine producers, charities, and governments to ensure a more balanced vaccine distribution worldwide. The task is to develop funding strategies for the markets so that fragile economies also have access to vaccines. At the same time, proposals made by WHO are not binding agreements, and it is up to states to come up with a national strategy in times of large-scale health emergencies. Some experts also point out that the pandemic may have reached peak levels and declined by the time a vaccine has been developed.
Between 80 and 90 percent of the genetic material of Covid-19 is identical with that of SARS. They both have a fatty shell encapsulating the RNA. Novavax has tested early-stage vaccines for SARS and is ready to start trials by mid-May. The new vaccine, NVX-CoV2373 has proven to be effective in that it is highly immunogenic in animals. Preliminary human data will be available in July. Some 130 healthy adults will participate in human trials to enable an assessment of the number of vaccines and exact dosage.
Moderna is also developing a Covid-19 vaccine based on previous work on MERS and expects to start human trials in May. The company announced that a limited number of vaccines will be available in fall. If all goes well, Moderna could be manufacturing millions of vaccines by the end of the year. The vaccine is based on messenger RNA which generates proteins on the basis of genetic information. Thera are some promising developments in vaccine creation. Vaccinology Professor at the Oxford University Sarah Gilbert announced that she was “80 percent confident” that a safe and effective vaccine will be available by September.
In all, three vaccines that passed through the clinical trial stage have proven safe to proceed with human trials. To prove that a vaccine is safe and effective, testing is done in three phases. The initial phase involves about 100 subjects and aims to ensure that the vaccine is safe. During the second phase, several hundred participants are vaccinated to assess how effective the vaccine is. The final phase involves thousands of participants, and the goal is to ensure that the vaccine is effective over a longer period of time.