Paralysis of several parts of the economy because of the COVID-19 has led to an unprecedented recession whose impact will be felt over the next 10 years.
For E.-Only us, the economists Matthieu Arseneau and Alexandra Ducharme of the National Bank Financial calculated that the downward revisions of us GDP for the next ten years (2020 to 2030) to be equivalent to nothing less than a 37% drop in real GDP from 2019.
In terms of revenue for the american economy, this represents over 10 years a shortfall of 7100 billion US dollars, says Stéfane Marion, economist and chief strategist at the Financial.
Worse yet, the financial damage to the u.s. economy are not limited only to this huge shortfall in revenues.
In their special study, A second containment is it inevitable ?, Arseneau and Ducharme say the total bill from the recession caused by the suspension of intentional economic activity should also include the staggering increase in the debt of the u.s. government.
To limit the damage of the economic paralysis, the government Trump has put in place a package of financial measures which has the effect of increasing significantly the budget deficit.
Alone, the increase of the us debt would swell the bill over the 10 years of the costs of the recession due to the pandemic of the COVID-19 of about 23 per cent of GDP in 2019.
It is, therefore, to say that the 7100 billion $ shortfall in revenues, it is necessary to add, according to Marion, a bill of 4400 billion dollars as additional financing needs for the u.s. government.
This brings the total bill to the recession caused by the first wave of the pandemic to 11 500 billion US$. And this, only for the United States.
Imagine how much the bill world when we know that all countries, without exception, have been severely affected by the COVID-19.
Given the close commercial relationship between Canada and the United States, the long-term consequences on the canadian economy from the current recession generated by the COVID-19 should be substantially similar to those contained in the United States.
Thus, in terms of revenue for the canadian economy, I have calculated that the shortfall over 10 years would amount to approximately 736 billion $.
To this shortfall, it will be necessary to add requirements for federal funding of several hundred million dollars. Which will inflate the total bill of the paralysis caused by the COVID-19 to more than 1000 billion dollars in Canada.
A 2nd containment ?
The economic cost of the containment, it is necessary to add, according to the analysts of the Financial, having a negative impact on other aspects of health, such as addiction (alcohol, drugs), mental health and weight issues.
As the mortality rate is markedly higher among the over 65 years of age, which are not part of the active population for the most part, ” political leaders should be cautious before considering a second stop “, say analysts at National Bank Financial.