Bank of Canada deputy warns of long-lasting pandemic ‘scars’ on economy

Bank of Canada deputy warns of long-lasting pandemic ‘scars’ on economy
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OTTAWA — The second-in-command at the Bank of Canada is warning that economic “scars” from the COVID-19 pandemic could become permanent without concerted effort from Canadians in all walks of life.

Senior deputy governor Carolyn Wilkins, who is to step down as of Dec. 9, says she realizes that the pandemic remains an important day-to-day concern for governments and policy-makers, but she urges more discussion about the post-pandemic recovery.

In a speech to the Munk School of Global Affairs and Public Policy, Wilkins says the economic recovery looks uneven and, while the accelerated transition to digitization is a source of improved competitiveness, it must be recognized that some people and jobs will be left behind.

She says Canadians should reject the idea that economic goals must come at the cost of social goals, citing Quebec’s daycare system as an example of a policy that created a “virtuous circle” in which families were helped and more women joined the workforce.

Wilkins suggests Canada could also be made more resilient through policies that encourage equity rather than debt financing as a way to foster business creation and growth.

She says conventional wisdom is that the economy is a public sector problem, but private sector investment in growth-enhancing initiatives and smart incentives such as green technology are also important for longer term growth.

“It’s not lost on me that I’m urging exploration of the far side of the moon — life post-pandemic — while life here on earth is still difficult,” Wilkins says in the prepared text of her speech.

“The pandemic has damaged the potential for Canada, and other countries worldwide, to generate sustainable economic activity. We need to set our sights higher to help businesses create good jobs and to make high debt loads more manageable.”

This report by The Canadian Press was first published Nov. 12, 2020.

The Canadian Press

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