Canadian consumers have a much more negative view of Canada’s economic recovery post-COVID-19 (coronavirus) than their American neighbours, according to a new survey by McKinsey & Company.
The Consumer Insights from Canada report is based on a survey taken between April 3-5.
It showed that almost 80 percent of Canadians are unsure or pessimistic about Canada’s economic recovery following the coronavirus crisis. Also 53 percent of respondents are living paycheque to paycheque and 74 percent of Canadians say that uncertainty about the economy is preventing them from making purchases or investments they would otherwise make.
Sandrine Devillard, Senior Partner with McKinsey & Company, a global management consulting firm committed to helping organizations create Change that Matters, said the overall sentiment of Canadians regarding economic recovery is very much in line with the French, Spanish, and Italian responses.
“It’s much more pessimistic than the U.S. sentiment. This came as a surprise to me. If you just look at the sheer numbers Canada seems to be so far in the better position in terms of fatalities. However, in terms of the consumer sentiments for the impact and the economic recovery, Canadian sentiment is on par with Europe and is much more negative than the U.S.,” she said.
The survey found that 21 percent of Canadian consumers were optimistic that the “economy will rebound within two to three months and grow just as strong as or stronger than before COVID-19.” In the U.S. that number was 41 percent.
“It’s a big, big difference,” added Devillard.
It found that 58 percent of Canadians were unsure “the economy will be impacted for six to 12 months or longer and will stagnate or show slow growth thereafter.”
And 21 percent were pessimistic that “COVID-19 will have a long-lasting impact on the economy and show regression/fall into lengthy recession.” In the U.S. that number was 14 percent.
“COVID-19 is, first and foremost, a major humanitarian challenge. Thousands of health professionals are battling the virus, putting their own lives at risk, while the global death toll has passed 100,000,” said the McKinsey report. “Overstretched health systems will need time and help to return to a semblance of normalcy.
“Solving the humanitarian challenge is, of course, priority #1. Much remains to be done globally to respond and recover, from counting the humanitarian costs of the virus, to supporting the victims and families, to finding a vaccine.
“In addition to the humanitarian challenge, there are implications for the wide economy, businesses and employment.”
The survey also found:
Canadian consumers are feeling financial strain, with a majority reducing spending and investments;
More than half of consumers report reduced spending in the past two weeks and expect to continue in the next two weeks;
That leads into decreased spend expectations across most categories, with a slight increase for groceries and home entertainment;
Up to 15 percent positive online spend intent is seen for select categories – household supplies, groceries, home entertainment;
There is a large expected behavioural shift towards live news and media;
Most Canadians believe the personal and financial impacts from COVID-19 will last well beyond two months; and
Overall public health, uncertainty about the duration of the situation, and the economy are top concerns for Canadians.
“Apart from groceries and entertainment at home, all of the (retail) categories that we surveyed are facing huge decreases,” said Devillard, adding consumers are expecting to spend far less in the coming weeks and months.
Again, that Canadian sentiment is on par with the European countries but much more pessimistic than the U.S.
“The intent to shift buying online remains but only for essentials and for some discretionary categories,” she said. “Like for instance to a certain extent books. In contrast to the U.S. it is far less in Canada. According to us this can come from three factors.
“The first one may be symptomatic of low online adoption still in Canada. The second one is also fewer online shopping channel options in Canada compared to many other countries in the world. And the third one is the more pessimistic sentiment.”