Here's what a global recession might mean for Saskatchewan
Here's what a global recession might mean for Saskatchewan
Talks of a global recession in 2023 remain relatively strong as the calendar reaches the second month of the year.
University of Regina associate professor of economics Dr. Jason Childs agreed that a global recession is quite likely given current circumstances.
“I think its variable by region of course but I think it is still quite likely,” Childs said.
According to Childs, many signs continue to point to an economic slowdown across the globe because businesses that he feels would have squandered in normal times may start to fail now that pandemic supports are gone.
“Businesses that would have failed in normal times survived because they were propped up during the pandemic and now those various supports are gone and we’re going to see probably a rash of failures [all at once] that would have been spread over two or three years,” he said.
While Saskatchewan isn’t recession-proof, it is a province that can be resilient to tough economic times for various reasons.
According to Childs, in 2008, Saskatchewan was able to virtually dodge a global recession in some aspects.
“Essentially what happened then was commodity prices stayed high because you had this building room where governments, including Canada’s, decided to spend really aggressively on things like infrastructure and other commodities,” Childs said.
A pumpjack works at a well head on an oil and gas installation near Cremona, Alta., Saturday, Oct. 29, 2016. (THE CANADIAN PRESS/Jeff McIntosh)
Childs explained that right now, he is closely watching China, which appears to be dropping strict COVID-19 lockdowns and rejoining the world’s economy.
“So they’re going to return and get back to engaging in the world economy, which should mean an increase in demand for commodities, including stuff we produce here in Saskatchewan,” Childs said.
According to Childs, that could help Saskatchewan navigate through a global recession better than other parts of the country and the world.
What will need to happen for a recession to set in is two consecutive quarters of negative GDP growth.
“That means we have less economic activity taking place and it’s [the economy] shrinking,” he explained.
Childs said during that time there is also a rise in unemployment, price stabilization with inflation disappearing in most scenarios.
“Recessions tend to be hard on the stock market. So you might see some stocks become a better value proposition. It [a recession] tends to tame inflation.”
With many people also concerned with housing prices and interest rates as of late, Childs said a potential recession likely wouldn’t do much to Saskatchewan housing prices.
“It might do more in say Vancouver or Toronto where we’ve got this huge international component to demand relative to Saskatchewan it’s not that big overall.
Childs said the Bank of Canada‘s rate increases in 2022 might be able to pull off “a soft landing” that slows inflation just enough to not cause a recession, but it’s not a scenario that he feels is likely to unfold.
“I’m not optimistic, but some people are,” he said.
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A pumpjack works at a well head on an oil and gas installation near Cremona, Alta., Saturday, Oct. 29, 2016. (THE CANADIAN PRESS/Jeff McIntosh)
