Thunder Bay economy could weather COVID-19 storm, at least in short term, economist says

The economy in northwestern Ontario could emerge from the COVID-19 pandemic relatively unscathed, at least in the short term, said an economist at Lakehead University in Thunder Bay.

Livio Di Matteo said the impact of COVID-19 will be felt across all sectors of the economy, but the impact of the virus may be softened because primary industries in the region are still running.

"The fact that they haven't been impacted as hard, at the moment and are still operating is good for the economy," he said, referring to mines, grain elevators and pulp mills, which are still running.

"If some of those industries can somehow be repurposed to still meet the short term demands of medical supplies, that's probably even better."

But, Di Matteosaid the situationcould change very quickly in the near future.

'Substantial impact' possible in 2 - 4 weeks

"The overall impact will be substantial in the next two to four weeks."

He said different sectors of the economy will see varying numbers of job losses, noting that Thunder Baybenefits from having a large number of government employees, but it's likely to feel the hit in the service sector.

"A lot of it depends on the sector that you're in. I'd say a third of the people employed in Thunder Bay at leastare employed in education, health, social assistance or public administration."

"Those sectors in terms of direct layoffs, will be impacted less severely than in terms of the arts and culture industry, accommodation and food services, which will obviously see a bigger hit. That sector is about 15 per cent of employment in Thunder Bay."

The city's other major industries such as transportation, warehousing, wholesale and retail, represents approximately 30 per cent of employment in Thunder Bay.

'All depends how long this goes on'

"That's a mixed hit. Transportation is still very important, and trade, it depends on what you're in. Grocery stores are going to stay open, and probably be boosting their activity. Persons like hairdressers, they're going to be shutting down because of concerns of transmission in the short term."

If job losses and an economic slowdown in the northwest mirror what is seen nationally, Di Matteo said unemployment rates in the region could easily hit 10 per cent. If the COVID-19 restrictions become more protracted, that number could go even higher, he said.

"It all depends on how long this goes on, I suppose. This is not a regular downturn, because the economy is slowing down, or there's some type of failure in investor expectations or confidence."

He said what is being experienced is more of a "sudden shock" with both supply and demand for goods and services waning.

However, Di Matteo said there are things the federal and provincial governments can do to help the economy.

'Economy will fix itself'

The first is getting the epidemic itself under control.

The second priority, Di Matteo said, is tax deferrals and tax support, which are being undertaken by all levels of government.

Finally, the government needs to properly plan for a pandemic, he said, noting the province has ignored its own SARS response plan.

He said the province had 15 years to plan, so he was uncertain why response to this particular global pandemic took so long.

"The economy, in a sense, will fix itself," he said.

Di Matteo said before restrictions were imposed, many firms were already taking measures to help slow the spread of the virus. He pointed to grocery stores having cart wipes available, noting that people will generally take action on their own.