Citing an economic prediction made recently by the International Monetary Fund (IMF), Quebec International Relations Minister Nadine Girault told an online gathering of members of the Laval Chamber of Commerce and Industry last week that the year 2020 could see the worst global recession since the 1929 crash and the Great Depression that followed it.
“It’s going to be worse even than the economic crisis in 2008,” said Girault, a member of Premier François Legault’s Coalition Avenir Québec cabinet, who was the Laval C of C’s guest speaker during the teleconference.
Girault maintained that the upcoming recession stands to be worse than the 2008 downturn, because this time we aren’t dealing with a financial crisis, “but a crisis that concerns a real economy,” she said.
“Industries are unable to have access to their work places, businesses are undergoing breakages in their supply chains,” said Girault. “You can see it in consumer spending on goods and services: spending has either been cancelled or postponed. So, the confidence of households has been very, very shaken up because of confinement and because of the loss of salaries.”
According to Girault, the gross domestic product (GDP) for developed nations will be shrinking by 6.1 per cent in 2020, following which they may see renewed growth of up to 4.5 per cent in 2021. In emerging nations, the GDP decrease will be 1 per cent in 2020, with a possible rebound of 6.6 per cent next year.
China to keep momentum
“So what we are seeing is that we will be facing some important challenges on this level,” she added, saying that China and India will maintain their positions as the two driving forces of the global economy. However, nations in general won’t be regaining their pre-pandemic momentum of growth quickly, said Girault.
With regards to the economic situation in Canada and Quebec, she said the IMF is forecasting a dip in the overall Canadian economy of around 6 per cent this year. Despite this, she insisted that a recovery in Quebec’s economy is already underway, although it will take several months before beginning in earnest.
New Panier Bleu program
Manufacturing is at least one of the Quebec-based industries Girault suggested the CAQ government wants to focus on. This would especially be the case in certain targeted areas such as pharmaceuticals, medical equipment and food production. In particular, she emphasized the provincial government’s new Panier Bleu program, which encourages consumers to buy products made in Quebec.
However, she cautioned that the CAQ government isn’t taking a “protectionist” stance with this policy. “Not at all,” she said. “Quebec will continue to be free trade. So, in that respect, international relations will become even more important than ever after the crisis.”
Regarding imports and exports, Girault said, “We have a lot of work to do and we have many opportunities to take to be able to bring up even more our exports, even if we reduce by a lot our imports … Yes, we must be autonomous, yes we must promote local buying, but presently the re-start of exports is important if we want to create wealth in the long term.”
With the recently-ratified United States-Mexico-Canada Agreement on free trade coming into effect on July 1, Girault acknowledged to Chambre de Commerce et d’Industrie de Laval president Michel Rousseau and executive-director Caroline De Guire that the agreement will be playing a major role in Quebec’s economic fate.
New trade agreement
“What’s obvious is that if there is one thing that won’t change in all of this COVID event it is geography,” said Girault. “The United States is our principal partner at the level of exports. Presently we export more than $66 billion of goods and services to the United States. So, they are by far our principal partner, it is the national border of the country with which we share the most and this will not change.”
She said the coming into force of the United States-Mexico-Canada Agreement “will facilitate exchanges on the one hand. And on the other hand, they too are very open and very conscious that we must conserve the stability of supply chains. So we must conserve the same continuous production capacity and production exchanges during a time of crisis.”