The chief executive of Canadian Imperial Bank of Commerce is expecting the country to soon experience an economic boost as more people become fully vaccinated against COVID-19. “Our neighbours to the south…are enjoying an economic boost that we have yet to fully experience here in Canada,” Victor Dodig told analysts. “That’s a tailwind we can look forward to in the second half of this year.”

If effective mass vaccination programs continue over the spring and summer, Dodig predicts a global rebound will also materialize in the latter half of the year with real GDP forecasts jumping by 5.7% domestically and 6.6% in the U.S.

Dodig’s remarks came as CIBC beat expectations and more than tripled its second-quarter profit compared with a year ago, when the pandemic was beginning. CIBC earned $1.65 billion or $3.55 per diluted share in its second quarter, up from a profit of $392 million or 83 cents per share a year ago.

Canada’s vaccination rates have climbed as vaccine supply has improved and politicians and public health officials have unveiled reopening plans for several provinces. “While we’re not on the other side of this pandemic yet, there’s every reason to be optimistic,” Dodig said.

When businesses are allowed to open their doors and welcome customers, Dodig believes it will have a big impact on the money many Canadians have managed to save while working from home and having fewer activities to spend on. He predicted the country will see heightened credit card activity as stay-at-home orders are lifted.

While Laura Dottori-Attanasio, who leads CIBC’s personal and business banking, said purchase volumes are already edging towards pre-pandemic levels, she cautioned that spending on big-ticket items, transportation, travel and restaurants is still low. “I do think it will take time for that part of the business to come back…so it does feel more like a 2022 event,” she said.

OECD raises outlook for Canadian economic growth this year

In a report released on May 31, the Organization for Economic Co-operation and Development (OECD), said that relief and stimulus measures in the more developed world had done much to get the economy through the pandemic recession and back on the path of growth. It forecast global output would rise 5.8%, raising its forecast from 4.8% during its previous outlook in December. This year’s predicted rebound follows last year’s contraction of 3.5%, and would be the fastest since 1973.

The OECD aslo said it now expects the Canadian economy to grow by 6.1% in 2021. The prediction is up from an estimate for growth of 4.7% that the OECD made in March. The rebound will be thanks to reduced COVID-19 restrictions in the second half of the year and external demand, the think tank said. Higher prices for commodities like oil and the projected increases in demand resulting from the U.S. fiscal package in March are also behind the boost in the country’s economic recovery.

The OECD said growth in Canada for 2022 is forecasted at 3.8% compared with a March estimate of 4%. Other data from the think tank projects that Canada can expect to return to pre-pandemic gross domestic product per capita by the second quarter of 2022.

The OECD listed several threats to the recovery, including lack of vaccines in poorer countries that have fewer resources for relief efforts. “A renewed virus-driven weakening of growth would be harder to cushion, resulting in further increases in acute poverty” and raising the risk of financial crisis, the OECD said in its forecast report. As long as the vast majority of the global population is not vaccinated, the report said, “all of us remain vulnerable to the emergence of new variants.”

Source: Toronto Star
Source: Globe and Mail
Source: Financial Post
Source: Toronto Star