The return to normal economic activity in Quebec should take place around mid-2022, predicts Desjardins. The regions of Bas-Saint-Laurent, Saguenay – Lac-Saint-Jean, Laurentides and Gaspésie – Îles-de-la-Madeleine will take longer to regain their health.
“There is still fragility in different regions,” concedes President and CEO Guy Cormier, whose organization says it is open to investing more capital at risk to support industries.
On Thursday, the Desjardins Group economic studies team unveiled its projections for the next few years, taking into account the impacts of the pandemic on various industries, such as tourism, retail and the entertainment sector.
According to the cooperative, the “speed of the revival of economic activities will vary from region to region”, which will have an impact on the labor market. The adaptation of companies to health rules and their digital tools will also weigh in the balance of the recovery.
In order to support its members, Desjardins announced on Thursday that it would maintain its relief measures on credit products and loans until further notice. Each case will be assessed individually.
For hard-hit businesses, the organization will also offer guaranteed financing rates for two years, “at the best rates available before the pandemic.”
“It would be a mistake to think that everything is behind us,” replies Mr. Cormier, specifying that more than 300,000 requests for relief have been signed and 2.5 million members have taken advantage of the various measures.
A second wave could muddy the waters and plunge the economy again, warns Desjardins, adding that during a period of confinement 45% of businesses here have suffered a drop in revenue of more than 50%.
Meanwhile, the province recently recorded record unemployment rates. Movement economists predict that the rate will drop from 9.1% in 2020 to around 7.5% next year in Quebec.
Most affected
Some business sectors will suffer longer, such as accommodation, food and beverage, retail and entertainment. And Desjardins does not hide it, other closures could occur.
Companies doing business abroad will also need to be patient. With the borders closed and the economy slowing, exports will still be affected until the end of 2021.
The regions which should recover the fastest are Abitibi-Témiscamingue, Côte-Nord and Nord-du-Québec thanks to the presence of the mining sector, whose activity was not put on hold for long. The value of gold has also skyrocketed, benefiting some companies.
In the Bas-Saint-Laurent, Saguenay – Lac-Saint-Jean and Gaspésie – Îles-de-la-Madeleine regions, the recovery should be more difficult because of the issues in forestry and agriculture caused by the conflict over lumber, the high price of fiber and the shortage of workers.
Manufacturing regions such as Mauricie, Chaudière-Appalaches and Center-du-Québec will also be affected by the drop in production of certain companies due to the drop in exports and the decrease in demand for certain products such as clothing.
For Greater Montreal, Desjardins forecasts that the economy will recover less quickly than across the province in 2020. The recovery will be more sustained in 2021. The construction of the Metropolitan Express Network and new real estate developments will contribute to this recovery.
As for the Capitale-Nationale, the public sector with its many employees has, among other things, helped to mitigate the shock of the crisis.
“The diversification of activities in the Capitale-Nationale over the past thirty years in rapidly growing sectors (optics-photonics, video games, etc.) will be beneficial to it,” concludes the Desjardins economic team.
Some measures of the Desjardins recovery plan
- Maintenance of certain relief measures
- Grand Mouvement fund of $ 150 million to support projects
- Financing rates guaranteed for two years, at the best rates before the pandemic, for hard-hit businesses.
- Partnership with the École de technologie supérieure to accelerate the transition to the circular economy in order to reduce waste.
- Desjardins will provide $ 1.8 million this fall in the form of bursaries to professional, college and university students.
Q: Will there be more important sectors for Desjardins in the post-COVID-19 period?
A: Before the sectors, we must prioritize the regions of Quebec. Next, we must prioritize the manufacturing sector, which produces several jobs, and the technology sector. The pandemic has accelerated the digital shift.
Q: Does the cooperative plan to offer insurance products for travelers again when the borders open?
A: We put a stop to that because the government is asking not to travel. In insurance, we insure risks. The day when we are going to be able to manage the risks well, for example with a vaccine, a normalcy will set in. Travel insurance will continue to be important to us. Our teams are looking at this file.
Q: With the growth of telecommuting, could premiums for home insurance go up?
A: We are currently doing analyzes. We have set up a working committee to look at the impacts of teleworking. There are pros and cons. This can create collateral damage, such as employee isolation. Could this have an impact on sales, because there are fewer people in the buildings? We look at all these dimensions.
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