Jim Evans introduced speaker, Greg D’Avignon, the President and CEO of the Business Council of BC. Greg’s topic was Doing business in a COVID world and how we rebuild the economy & society.
Greg, admitted to being a big Rotary fan. His whole family have been, some still are, very involved with Rotary. Greg himself benefitted as a youth by being a Rotary scholarship recipient. Just at a point in time when there is so much uncertainty, Rotary’s values are more important than ever.
The Economic Fall-Out of COVID-19: How Bad Is It and Where Are We Going?
I know many have been frustrated by the many aspects of COVID. Want to share the opportunity to consider some food for thought: There are good things ahead going forward.
Many countries are at different stages in stabilizing the process. Supply chains have been interrupted all around the world. As of today, if you look at WHO, there are over 8.2M confirmed cases, over 445K have died. With more testing, these numbers will likely increase. With more economic movement and loosening of rules, there is a fear of increased potential transmission rates. This is a real concern.
We’ve been operating March through May at about 30% of normal. Modelling of BC shows that when you get to about 70%, you see the risk of exponential transmission rates.
Great work is being done but they probably won’t have vaccines available for at least 18 months. 64 nations are doing vaccine work, including BC in Canada. Once a vaccine is approved effective, then most of those jurisdictions will take care of their own populations first before distributing out. Will it be effective? No one knows. There has not been an effective vaccine developed for SARS yet.
Canada’s economy was already slowing before the pandemic hit, COVID has exacerbated it. It is likely there will be a 300B deficit this year alone. Larger business, as well as smaller, are going to fail – approx. 500K expected. Some sole proprietors, some with employees. This morning the federal government announced that CERB will be extended through to end of summer.
There are all kinds of trends we can study that occurred before the pandemic. With each there is a fundamental transition of society and the economy, but usually it takes decades. We expect to see an acceleration with COVID shortening the transition to 3-5 years. Its going to change how we buy, work, live, learn, travel, and how we manage our own health. You may have experienced significant change already yourself.
We can expect a best case of global economic decline of 6%. If 2nd wave hits, then we may increase to 8-8.5%. This is a much deeper recession than we experienced in 2008-09.
Not surprisingly Canada has been very analogue. Firms that had already invested in the digital space are actually expanding and growing. Banks are taking unprecedented steps to shoring up economy. Real terms give sense of what will continue in 2020 with the global GDP growth at -6%. What we can expect in 2021 is a conservative 5.2% growth. It will take at least until the 3rd quarter in 2022 or beginning of 2023 before we see positive growth moving towards “normal”.
B.C. has a lot of reasons to do well. We are controlling the virus very well. Dr. Bonnie Henry is talking to people every day. We have managed to keep our economy open during most of the time. The numbers are a bit misleading right now. As testing has increased significantly very recently the COVID case numbers may change as a result.
The restart strategy that was put into place a couple of weeks ago still restricts quite a bit, wanting to keep normal interactions at about 50%. It’s all about managing public health and health systems so that we can quickly and safely manage cases. During April – May we were running at about 56% capacity, normally about 101%. The concern is about keeping it below the 70% threshold to stay safe and control transmissions.
A lot of businesses, in fact over 130 different sectors, stayed open throughout. Phase 2 that came into effect in May, allowed the opening of non-essential retail, offices, restaurants (50% capacity only), health care and other professional services and businesses. Must follow strict guidelines. Phase 3, June-September, will see hotels, resorts, parks, film/TV production, post-secondary and K-12 education all resume operations with new restrictions. Phase 4, no set date yet, includes international tourism/travel, conventions, large meetings, concerts, sporting events, etc.
The re-opening will bring an upswing in employment, but it will take time. One of the things aware of is catastrophic on employment. There is no historical precedent for the recent employment drop – a loss of almost 400K jobs to date due to COVID. This is primarily a private sector issue, with over 95% of the job losses in the private sector.
The group most impacted is our younger workers, 15-24 years of age. There is an almost 30% unemployment in that group. In some industries there is an anomaly being experiences where they need workers but cannot find the people to fill positions; it may be because it is better for them to take CERB payments than working part-time. The bigger issue than just employment is our youth are languishing which has a number of ripple effects for their futures.
There has been a bit of a bounce in some sectors due to reopening. Throughout it all, there has been a move to try to shore up businesses and individuals from the federal government, with emergency wage subsidy, the emergency business account, as well as a number of other initiatives. The BC government has not spent a lot on this but has done things such as delaying tax remittance filings and payments, reduced school taxes for commercial & industrial properties, relief on Hydro payments, etc. BC has set aside $1.5B for economic recovery with specifics of allocation to be determined as need is identified. Of course, the consequence of the aid to help offset the difficulties is that the bills will still need to be paid. Taxes are expected to go up.
What does the COVID-19 crisis mean for all of us?
- Isolation and nativism. Seeing play out in unfortunate ways, particularly racially. See a shift to remote working from home. This leads to cost savings but will have knock down effects on office space, and businesses that rely on populations in the downtown core.
- There are some risks, but there are opportunities as well. Immigration may well increase as BC and Canada very attractive, more so now than ever.
- There has been a sharp fall off in business travel. Huge consequences for the travel & conference industry. How we think about travel is going to change dramatically.
- Increased use of digital platforms. How we personally and professionally bank and interact has made e-commerce the norm for most. This all will create new jobs that we don’t even know about yet.
- How we shop, where we shop will change. How we learn, where we learn will change. Location will no longer be a factor.
- It has become evident that we have become extremely reliant on the global supply chain. It will be important to have more control, requiring resiliency of the global supply.
- Healthcare has transformed radically. Over 80% of consultations are happening online. People and doctors are getting used to it.
To conclude, we acknowledge that the world is slipping into a very deep recession; we will all be affected. The global aspect will, in particular, affect BC’s export sector. We will see some widespread business failures, though there will also be some opportunities as well, for new businesses to emerge.
Though there is very real worry about a 2nd wave of COVID, we want to stay positive. We should concentrate on how to use this transformational period to create growth, be prosperous, and succeed.
CLICK HERE to view a copy of Greg D’Avignon's powerpoint presentation.
We all have different ways to prepare for and deal with life changes, both expected and unexpected. Life outcomes vary depending on a wide variety of factors, including our views and responses to change. What did we initially think of change? How has it evolved based on our life experiences and of those around us? Where have we ended up in our "relationship" with change? In this talk, Professional Life & Divorce Coach Vindy Teja shares her journey about her love-hate relationship with change, and lessons she learned about surviving and thriving in times of change.
