This past week we saw the price of oil fall to over 20%, the largest single-day decline since 1991. The rapid decrease in oil prices was preceded by the announcement that Saudi Arabia will not cut their oil output. This rapid drop in oil prices combined with fears over the impact of COVID-19 prompted a massive ten percent decline in the S&P/TSX Composite Index with energy and airline stocks being hit the hardest.
COVID-19, also known as the Coronavirus, has caused a concern with oil over-supply as it wreaks havoc on China, the second largest consumer of oil in the world.
Countries like Italy and Japan are also facing challenges associated with the spread of the virus. Massive quarantine efforts have been made in Italy to contain the virus. As a result, there is now an economic slowdown, including U.S. President Donald Trump issuing a travel ban on some European countries. Most people who have been in any of the 26 countries listed will not be allowed into the United States for 30 days.
The full scope of COVID-19’s financial impact is not yet known. However, the global economic outlook has deteriorated as the world economy grinds to a halt and it is clear that Canada is and will be greatly affected.
Unfortunately, in Canada slowing global growth, reckless spending, and burdensome regulations (red tape) by the Liberal Government has left Canada’s economy susceptible to economic recession. The lack of tangible solutions regarding the blockades and a hostile business environment has Canadians questioning Liberal leadership.
It is clear that Justin Trudeau and the Liberals have left Canada in a vulnerable position, with serious concerns about our nation’s economy prior to the recent challenges. Despite the evidence, the Government seems blissfully unaware of the challenges.
Canada’s economy grew a mere .3% in the fourth quarter, the worst performance in four years; this was before the threat of COVID-19, the recent drop in oil prices, and rail blockades.
RBC chief economist Craig Wright stated the probability of a recession in Canada is “almost a coin toss.” In addition, Beata Caranci, chief economist at Toronto Dominion Bank, stated that “it’s very possible that Canada, in the first half of the year, has no growth”.
The plethora of analysts downgrading Canada’s economy displays the fiscal dissonance that Conservatives have been warning about for years.
The lack of concern expressed by the Liberals in a time where we are facing so much economic adversity is alarming. Canadians can count on the Conservative Party of Canada to stand up for our nation’s economy with sound fiscal policy and strong leadership.