Globally, the outbreak of COVID-19, otherwise known as the coronavirus, has caused chaos and panic on a societal and economic level. For Canada’s markets, the impact of the pandemic is severe. From the worst one-day stock market crash in 80 years to increased anxieties regarding the financial stability of businesses, investments, and governments, the outbreak has worsened existing concerns about the Canadian markets.

Business Failure

A common concern for Canadian businesses relates to spending habits. Due to economic concerns (now heightened by the coronavirus outbreak), people are less willing to spend money, especially on items or services that are deemed non-necessities. As a result of this practice, the economy begins to falter as individuals take to extreme saving practices, and businesses are more likely to fail due to a stark decrease in profit. In times of crisis, individuals will be more inclined to spend money only on items like food, paper products, and necessary utilities, resulting in economic stagnation.

Coronavirus Pandemic

The escalation of this pandemic has resulted in heightened anxieties pertaining to travel, healthcare, and the economy. The stock market witnessed a significant drop that has led to widespread concerns. The Federal Reserve and the Bank of Canada are taking steps to help alleviate some of the detrimental effects of this drop, including measures to inject money into the stock market and promoting interbank funding.

For the real estate industry, the coronavirus outbreak will likely result in increased demand due to increased immigration, and this could lead to higher property values. The immediate effect will be negative as the industry stands to lose money due to prospective buyers halting their searches, but long-term, industry professionals suspect the impact of the virus may not be devastating.

In areas such as hospitality and lodging, travel restrictions due to the outbreak are causing financial strain, but when it comes to REITs and other forms of real estate investing, long-term leases are set to provide stable income for landlords and other investors.

The impacts of the coronavirus pandemic on the Canadian economy are still to play out. However, economic powers and industry professionals are making efforts to prevent further damage and limit the impact of existing effects of global concern. Still, it is important to acknowledge that these effects could likely result in a prolonged market slump should the panic persist, so taking measures to protect your finances may be in order.