Moody’s notes the resilience of Canada

Moody’s signale la résilience du Canada

Photo: Emmanuel Dunand Agence France-Presse
The deficit and the debt ratio could exceed respectively 10 % and 90 % of GDP this year.

Canada will recover from the double shock of the health crisis and the collapse of oil prices. The profile of its sovereign debt will prove resilient, believes Moody’s Investors Service. In his overview of the canadian economy that is dated April, Moody’s stated that its base scenario forecasts a decline of 2.2 % in real GDP in 2020, however, a high risk of contraction more severe. “The strong response of monetary and fiscal will help limit damage “, avance-t-it.

The short-term deterioration of the fiscal situation of Canada will be pronounced. The deficit and the debt ratio could exceed respectively 10 % and 90 % of GDP this year. But, in the medium term, the profile of the sovereign debt of Canada, will display its resilience, the rating agency assumes a recovery and fiscal consolidation.

At the regional level, the flexibility of the income and expenditure of the provinces other than oil, their liquidity and their access to the capital market will temper the temporary shocks of the pandemic. They will however have to contend with the pressures on the municipalities and the universities.

Among the major industries, banks have sufficient liquidity to do so in the face of declining interest rates, the decline in oil prices and the increase in provisions for bad debts. In contrast, the recovery in the airlines, among the major éclopées of this crisis, is dependent upon the duration of the restrictions and behaviour of the travellers in the post-coronavirus, which are likely to defer or reduce their vacation or their business trip. Their rating is under review, with a downgrade for, although the federal assistance, yet to be defined, will have an effect on this evaluation.

Finally, the cultural sector, and retailers of non-food products will also combine with the pressures on disposable income, demand is depressed and can prolong the period of recovery.

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