Forecasts from the federal government predict close to two million Canadians without jobs and a federal deficit of $343.2 billion.
Canada’s debt is also growing and is predicted to top $1.2 trillion by the end of the fiscal year.
And Fitch Ratings recently downgraded Canada’s credit rating from AAA to AA+.
These bleak economic conditions come as a result of Canada’s response to the COVID-19 pandemic.
Early into the pandemic, the federal government responded quickly with numerous assistance programs for individuals and businesses affected by the shutdowns.
Many have received payments under the Canada Emergency Response Benefit. Others have received other forms of assistance from the federal government. The payments have made a difference for many who would have otherwise been struggling financially, especially in the early weeks of the pandemic.
Providing little or nothing in the way of assistance might have taken pressure off the federal government, but such a choice would have pushed huge numbers of Canadians into financial stress.
The question to ask now is what happens next.
Under the best-case scenario, if a vaccine or a cure were suddenly developed, it would be possible for the Canadian economy to rebound and for those now receiving the benefits to return to work. But the federal government would still need to address the debt and deficit.
Money woes do not simply vanish on their own. If the pandemic continues for another year or two, or if a second wave were to develop, the effects would be much worse.
With an increased debt load and a downgraded credit rating, it could become difficult for the federal government to acquire the money necessary to cope with the costs of an ongoing COVID-19 pandemic.
At this point, there is no value in pointing fingers or in asking whether the federal government should have taken a different approach in its response to this pandemic.
The more important question is how to respond from here. This is a difficult question since nobody knows how long this pandemic will continue or whether a second wave will result in another massive shutdown.
The COVID-19 pandemic has taken a toll on many in Canada.
The costs of coping with this pandemic will be felt for many years to come.