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HomeNewsGlobal NewsWhat to expect from the fourth COVID wave

What to expect from the fourth COVID wave

By BDC

MONTREAL, Canada – The number of new daily cases of COVID-19 has been increasing in Canada since the beginning of August, signaling that a fourth wave is underway.

This latest wave brings risks for the recovery, but the Canadian economy appears well-positioned to weather the storm. Waves come and go, but they are not the same.

What will the business environment look like this fall? This month, we look at three factors that companies should consider in preparing for the fourth wave.

An enviable vaccination rate

The first factor to consider is the vaccination rate. Canada has the highest vaccination rates among G7 countries, with two-thirds of the population fully vaccinated by early September.

The success of the vaccination campaign is clearly reflected in a relatively low number of new cases, but more importantly in a low number of hospitalizations. However, while research shows that vaccinations are strongly protective against infection, vaccinated individuals can still transmit the virus.

That’s why physical distancing, mask wearing and limits on the size of gatherings will remain the preferred measures to counter this new wave.

Most businesses have already adapted to these measures, although new adjustments may be necessary, such as requiring a vaccination passport to visit certain places. All in all, vaccinations should keep closures and economic disruptions to a minimum in the coming weeks.

Risks and limitations will persist for some sectors

There is no such thing as zero risk when it comes to the pandemic, but the level of risk differs by industry. While many industries in the goods sector have fully recovered to their pre-pandemic level of activity, service sectors are still struggling.

Each new wave is a sword of Damocles hanging over high-contact sectors. The restaurant, arts and entertainment, and retail industries have been the main victims of previous waves in Canada.

Challenging conditions for service businesses are likely to persist during the fourth wave. Venue capacity will remain limited; business travel is unlikely to pick up this year; and face-to-face events will be more limited.

The tourism industry was still far from full recovery during the summer, but the borders should remain open to fully vaccinated travelers this fall, helping to extend the season. That said, businesses in this sector remain most at risk for new restrictions, depending on the trend in new cases and the emergence of new variants.

The international situation weighs on supply chains

While the health situation in Canada is relatively good, businesses are not immune to COVID-related difficulties. As a small, open economy, many Canadian companies source all or part of their supplies from abroad.

The pandemic has created a number of challenges for the goods producing industries and these challenges will continue for several months.

Among these is the price of raw materials. While this has benefitted Canadian exporters, the price of many inputs has skyrocketed as demand for these products has risen sharply and supply has been slow to adjust.

The good news is that industries are beginning to adapt and some prices are coming down to more sustainable levels. This has been the case for lumber producers, in particular.

The pressure on production costs created by high raw material prices should slowly improve in the coming months. However, supply bottlenecks for some products and shortages of freight capacity will take longer to recover.

The reopening of economies around the world has created strong demand for space in shipping containers. However, ports in some countries have been forced to close to contain the spread of the virus. Most recently, in late May, parts of a Chinese region that has one of the most important ports for containerized exports was forced to close. Each port closure results in ships being stuck outside the port, unable to handle the pile of cargo that has accumulated.

At this point, any type of disruption will have a disproportionate effect on transportation costs and delivery times. Companies are already talking about supply problems for the holiday season.

What the fourth wave means for your business

  • Canada’s vaccination rate is high compared to other developed countries. The impact of the fourth wave on businesses and the economy is therefore expected to be less significant than previous waves. Health measures are not expected to increase significantly.
  • High-contact service businesses remain the most at risk for new health measures. If your company is in this type of business, consider this risk in your strategic planning.
  • Although the health situation in Canada is encouraging, the pandemic is taking a much heavier toll in many countries. International restrictions are causing shortages and supply problems. Entrepreneurs whose business depends on international trade, whether for imports or exports, should plan accordingly.

Source: BDC

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