The IMF has released the October 2020 edition of its fiscal
monitor and economic indicator numbers for world economies and its World
Economic Outlook report titled “A Long and Difficult Ascent” paints a pretty gruesome picture of the
carnage wrought by the COVID-19 pandemic.
While the global economic growth outlook has improved somewhat from its
June 2020 report, it is still projected at -4.4 percent and is surrounded by a
fair amount of risk.
However, in the end, performance is relative and what is
more interesting is how different advanced economies are expected to fare in
2020. Moreover, what is also of interest is their
performance economically and fiscally relative to their pandemic performance –
which certainly should be of interest to Canadians. Polling
results have often
indicated that Canadians have largely approved of the way that their
governments have responded to COVID-19 and an international ranking places Canada
near the
top of countries whose public thinks their country has handled COVID-19 well. How justified is this perception by
Canadians?
In understanding how well Canada has done dealing with
COVID-19, one has to start with how Canada ranks in terms of the severity of
the disease which in itself can indicate how good a job Canada has done in
limiting its spread. Figures 1 and 2
plot the ranked total number of COVID-19 cases per 1 million population and the
deaths from COVID-19 per 1 million people as of October 17th (as taken from Worldometer) for 35
advanced economies as defined by the IMF.
Cases per 1 million ranged from highs of 32,914 and 25,083 for Israel
and the United States to lows of 490 and 376 for Korea and New Zealand respectively. COVID deaths per million people ranged from
highs of 893 and 722 for Belgium and Spain (with the USA third at 675) to lows
of 5 for both New Zealand and Singapore.
Canada ranks 21st in total cases per million –
putting it in the bottom half of incidence severity – but 10th
highest in deaths per million population putting it in the top third. So, while Canada was not hit as hard by
infections compared to many countries, it was among those seeing higher death rates – largely because of its poor handling of the long-term care sector
where over 80 percent of the deaths occurred.
While Canada is not the United States or Spain or Belgium in terms of
the incidence and mortality of COVID-19, it is not Australia or New Zealand or Korea
either. One might argue being an island helps but it did not help Cyprus or Malta that much.
How about the economic impact? Figures 3 to 6 are based on the IMF October
2020 World Economic Outlook Report. Figure
3 ranks the 35 advanced economies in terms of their projected 2020 real GDP
growth rates and here Canada ranks 24 out of 35. While everyone is going to see their economy
shrink, some are going to be hit worse than others. Canada is basically at the
top of the bottom third with an anticipated drop in real GDP for 2020 of -7.1
percent. Overall, it is sandwiched
between highs of -1.8 and -1.9 percent for Lithuania and Korea and lows of
-10.6 and -12.8 for Italy and Spain. Figure 4 ranks these same countries according
to their estimated 2020 unemployment rate and here Canada is an honorary Mediterranean
country where at 9.7 percent it is coming 4th out of 35 countries –
behind Greece, Spain and Italy. And if
one looks at the percentage point increase compared to 2019, Canada’s is a 4
percent point increase. Based on Figure
5, we are the second worse increase of the 35 advanced countries, behind the
Americans who are expected to see a 5.2 percent point rise in their
unemployment rate.
Of course, one might think that Canada’s somewhat mediocre performance
relative to other advanced countries when it comes to the spread of COVID-19 and
its mortality rate may simply be due to the fact that Canada has been a
cheapskate in terms of its public spending compared to other countries. And, by extension, perhaps our economic
performance has been so much worse than other advanced economies because our
federal and provincial governments have been captured by deficit scolds who have foisted restraint upon Canadians. Well, put those notions to rest. When the government deficit to GDP ratios for
these advanced economies are ranked in Figure 6, it appears that Canada is
finally number one in something – the size of its 2020 government deficit
relative to GDP. It is expected in 2020 to
have the largest government deficit to GDP ratio of these 35 advanced economies
registering at 19.7 percent.
Once again, Canada has been spending a lot and seemingly
getting relatively much less for its money.
True, we have not done as badly as some countries when it comes to the effects
of COVID-19 on our population (unless you are a resident of a long-term care home) but our economy appears to have been fairly hard hit even with the
many billions of support and assistance that have been funneled into it. Why Canadians have to date been so charitable
towards their federal and provincial governments when it comes to performance
during the COVID-19 pandemic is a bit of a puzzle to me. Perhaps we just like to be nice.
