By Canadian Press

Shrinking economy and rate cuts as COVID cases surpass 4,000 in Canada

Mar 27, 2020 | 8:23 AM

TORONTO — A shrivelling economy, sharply higher federal deficit and lower interest rates are among the fallout of the COVID-19 pandemic as the steadily growing case load of infections in Canada surpassed 4,000.

Parliament’s budget watchdog on Friday projected the deficit for the coming fiscal year to reach $112.7 billion — quadruple what it would have otherwise been — as government spending climbs to fight the drastic economic fallout of the pandemic. The budget office also predicted the economy would contract a huge by 5.1 per cent this calendar year, which would be the weakest on record since 1962.

In addition, the Bank of Canada cut its key interest rate by 50 points to 0.25 per cent — effectively near zero — in an effort to keep cash in the system flowing.

“Low interest rates help to cushion the shock by easing the cost of borrowing,” Bank of Canada Governor Stephen Poloz said. “The intent of our decision today is two-fold: to immediately support the financial system so it keeps on providing credit, and, over the longer term, to lay the foundation for the economy’s return to normalcy.”

Poloz said it was too soon to say whether Canada was in a recession.

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Latest numbers show 39 people across Canada have died as a result of the highly contagious COVID-19 virus, 15 of them in Ontario, which has seen the most fatalities. Quebec, with eight deaths, has reported the most cases in Canada at 1,629 — around double that in Ontario and British Columbia, which has seen 14 deaths.

Only Nunavut has not confirmed any infections to date.

The flu-like COVID-19 poses a particular risk to older people and those with underlying conditions but can strike anyone. Governments and experts have urged people — in some cases backed up by the threat of fines or jail time — to keep their distance from one another. Travellers entering Canada are required to quarantine for 14 days.

The COVID crisis has been keeping police busy, sometimes in unusual ways. For example, police in Hamilton charged a teenaged McDonald’s employee with fraud, mischief and uttering a forged document for allegedly faking a doctor’s note that she had the virus. The outlet was forced to shut down for several days while it was sanitized.

In New Brunswick, police charged a man with assault for allegedly coughing in someone’s face. Kennebecasis regional police say they had responded to a call about people failing to isolate themselves after returning from abroad as is mandatory. The man was arrested for allegedly uttering threats and “purposely coughing in someone’s face while feeling ill.”

With much of the country’s normal life affected by business closures and directives to stay at home, governments have scrambled to cushion the economic fallout. The Liberal government in Ottawa has already pledged $107 billion in direct assistance and tax relief for those among the unprecedented newly jobless, with more help expected.

This report by The Canadian Press was first published on March 27, 2020.

Colin Perkel, The Canadian Press