Bank of Canada says coronavirus could seriously test Canadian economy

The Canadian economy’s resilience could be “seriously tested” by a coronavirus outbreak depending on its severity and duration, Bank of Canada Governor Stephen Poloz said on Thursday.

Poloz spoke a day after the central bank slashed a key interest rate by half a percentage point and said it was prepared to cut further if needed to help tackle the effects of the coronavirus, also known as COVID-19.

“The Canadian economy has demonstrated good resilience in the past couple of years. That resilience could be seriously tested by COVID-19, however, depending on the severity and duration of its effects,” he told a Toronto business audience.

The economy was headed for another quarter of “very slow economic growth” which could drag on into the second quarter, Poloz said. As well as the outbreak, the economy is dealing with the effect of bad weather, rail blockades and a teacher’s strike in Ontario.

“There is a real risk that business and consumer confidence will erode further, creating a more persistent slowdown, especially given recent declines in stock markets,” he added.

Bank of Canada says coronavirus could seriously test Canadian economy, Reuters, Mar 5