Now that we're in the second wave of the pandemic, a Canadian economist has an optimistic outlook for Canada's economic recovery and says that the second half of the new year will be "strong" for the country's economy.
Benjamin Tal, deputy chief economist at CIBC, joined BNN Bloomberg earlier this month to discuss how Canada's economy will recover in the months to come and said that Canadian businesses have pivoted and the country is significantly better prepared for the months ahead.
READ: 2020 Will Be ‘Banner Year’ for Canadian Housing Market: BMO
However, in light of this sense of optimism, Tal says he believes that the next few months are going to be challenging, especially for small businesses.
"Let's be clear, it's going to be a difficult winter," said Tal, adding, "some small businesses won't be able to survive... that's almost a given."
But there is light at the end of the tunnel as Tal says there are "positives in the negative" in the sense that Canada won't shut down the economy completely like what we saw happen in March and April.
Tal noted that many businesses "will be able to do okay" because they will be able to utilize what they've established over the past six months, which will help them ride out the winter months.
Looking ahead, Tal says that he believes the second-half of 2021 will be strong for the Canadian economy.
"I think stronger than what the market is currently anticipating," says Tal, adding, "we have so many forces that will lead to this strong performance in the second half. Clearly, we're going to have a vaccine and confidence will go up. We know that there's a huge amount of pent up demand. People are dying to spend and guess what, they've got the cash."
Tal said that as he's previously discussed, "there is 90 billion dollars of excess cash is sitting on the sidelines, looking for direction. They will find something to do with this cash and it will be utilized in the economy leading to a significant increase in spending."
"Overall, I believe that we can a significant improvement in the second half of the year because we have the potential to do so, the will to do so, and the ability to do so."
READ: CIBC Deputy Chief Economist Warns that Housing Market Slowdown is Coming
Tal also said that he believes Canada's economic recovery will outperform the US early in the new year.
"The prime minister made it very clear: 'whatever it takes', and if whatever it takes is more money then there will be more physical money,' so, therefore, in this sense, we are leading the way, and that's why I believe Canada will outperform the US early in 2021."
Tal's latest outlook follows his previous prediction that a Canadian housing market slowdown is looming.
“Even the governor of the Bank of Canada is telling us, listen, don’t expect any growth basically over the next six months. The party’s over. You can’t have a o% increase in the economy with the housing market continuing to boom,” said Tal.
Tal also added that another factor influencing his forecast is that the damage to the labour market will be “much more significant in terms of the impact of the economy and the impact on the economy.”
“Normally you would see more higher-wage jobs disappearing or at least you would have less job security there. And that’s very, very important,” explained Tal. “So, I believe that this optimism is not actually going to last for too long.”
