The impact of the COVID-19 pandemic on human health and wellbeing is disturbing and frightening and unfortunately the entire effect is still not fully clear. Opinions are flourishing online and in the media. At this point, South Island Prosperity Partnership (SIPP) would like to offer our perspective on the possible impact to our local economy.
Experts are still unsure how the COVID-19 crisis will shape an economic downturn, as markets react in unprecedented ways. Severe market reaction has seen an abrupt end to the 11-year bull market and the volatility index is at an all-time high. It bears highlighting that this activity so far does not compare to the severity of the 2007-2009 financial crisis when the banking sector was the source of the crisis itself. Presently, the outbreak is an external influence on the financial sector. However long it lasts, several weeks or months, rest assured that this situation is temporary, and our economy will recover from the losses.
Community health and wellbeing is the most important priority at this time, but we are deeply concerned for the businesses and individuals that will be hit the hardest. In our local market, industries such as tourism, accommodation, recreation, transportation, retail and restaurants are in the direst position, as well as the many local small and medium-sized businesses that are facing acute difficulty in meeting their short-term cash needs. According to NPR, China’s business activity has resumed to approximately 80%, while containment seems to be effectively stabilizing their economy. The situation in other parts of the globe is grave with people already losing jobs and many businesses closing their doors. The Federal Government’s announcement of a substantial package of $82 billion in emergency aid and tax deferrals will help, but cannot eliminate, these clear and present dangers.
Measures to reduce the spread of the virus, such as strict border controls, will increase pressure on tourism, accommodation, recreation, transportation, retail and restaurant businesses. These sectors are integral to Greater Victoria’s economy. Education at all levels is on hold, while technology, manufacturing, and construction are facing slowdowns due to supply chain disruptions and the increasing number of sick leaves. Real estate demand will likely decline simply due to decreased consumer confidence as it is around the world.
Other sectors, like public administration and health, may not be greatly impacted but their employees are among those no longer frequenting restaurants, retail stores, and other services like dry cleaners, automotive services, gyms and hair salons.
There is hope. In times such as these it is important to remind ourselves that the economy will eventually recover from this hardship and that collaboration is more vital than ever. New opportunities will also emerge from the crisis. We will see new innovations, new products, new services, and new ways of doing business. Many people are already rapidly learning how to work remotely and perhaps enjoying some of the time savings associated with telework and digital connectivity.
Unlike in the Great Recession of 2008-2009, our region now has a vehicle for collaboration through which to address both the challenges and opportunities facing private businesses, as well as First Nations and Municipalities, industry associations and post-secondaries. Greater Victoria also boasts amazing social and institutional fabric. Local industry organizations like the Chambers of Commerce, Destination Greater Victoria, VIATEC, Downtown Victoria Business Association, Victoria Real Estate Board, and the Greater Victoria Harbour Authority are working tirelessly to ensure that the voice of their membership is heard and brought to the ears of political leadership.
As Oxford globalization expert Ian Goldin says, “High walls will not stop pandemics, or any global threat. What is being tested is our will to cooperate.” SIPP was first formed in 2016 because walls don’t work and back then we found that our region was one of the slowest to rebound from the Great Recession. Today, we once again find ourselves in a precarious economic position, but this time we are more agile because we have learned from the past and have built a bridge across municipalities, sectors and industries.
In the coming weeks, SIPP will reach out to stakeholders and the public to get input on a regional economic development strategy that will help us chart a path toward a future economy that is more resilient and able to withstand challenges such as the current one. This is your economy. Have your say. Please visit this page on our website regularly to provide real-time feedback on the future path forward for our regional economy.