![]() In contrast, the peak occurred near the 10‑month mark following the start of the recession. But this increase had fully reversed within 10 months of the wildfires. The peak increase in the number of EI recipients was much greater after the wildfires than it was following the recession. We see this when we compare the number of recipients of employment insurance (EI) in Fort McMurray, Alberta, after both the 2008 recession and the 2016 wildfires-the costliest natural disaster in Canadian history (Statistics Canada 2017) ( Chart 1). This contrasts with the 2008 recession, which reflected an underlying fragility in the global financial system that resulted in a lengthy downturn. The key feature shared by natural disasters and pandemics is a sudden stop of economic activity caused by a shock that is unrelated to economic factors-in this case, a public health crisis. The economic impact of COVID-19 is often compared with past recessions, but this pandemic arguably has more in common with natural disasters. Finally, we run model simulations to illustrate how payment deferrals and the recovery of the labour market affect mortgage defaults. We then assess the financial health of the household sector when the pandemic began. We examine how the COVID‑19 shock affects Canadian households by drawing parallels between pandemics and natural disasters. But the pandemic is different than the triggers and related scenarios that economists typically use to assess the risks to financial stability. The potential for a trigger event to occur when household debt is high has long been cited as the biggest risk facing Canada’s financial system (Slive and Coletti 2018). ![]() ![]() From a financial stability perspective, a key concern is whether households can keep up with their debt payments. This has resulted in widespread income losses, creating a challenging situation for many Canadian households, especially those that are highly indebted. COVID‑19 poses financial challenges for Canadian householdsĮconomic activity came to a sudden halt due to the COVID‑19 pandemic. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |