all you need to know
In 2020, the Canadian economy contracted by 5.4%, the US economy by 3.5%. Like almost every economy in the world, the two North American powerhouses were hit hard enough by the COVID-19 pandemic to tip them into recession.
The good news is that both countries are bouncing back almost as quickly, with Canada’s economy set to grow by 5% in 2021 and America’s by 6.4%. By pre-pandemic standards, these are Chinese growth rates that would have astonished and delighted North American policymakers just a year or two ago.
By the second quarter of 2021, American GDP was once more as big as it had been before the pandemic. Inevitably, the US economy is the focus of much of this report, which covers the US and Canada (for information about Mexico, see the PPRO Payments and E-commerce Report for Latin America). The US accounts for 93% of the region’s GDP. And 75% of Canada’s exports go to the United States. If you want to know whether Canada is likely to prosper in any given year, the best indicator is the predicted performance of the US economy.
In August 2021, the US Senate approved President Biden’s US$1.2 trillion stimulus plan, designed to modernise the US economy and infrastructure as well as give the country the boost it needs to exit the pandemic into a period of sustained growth. Economists from Moody’s expect the plan to help the US sustain the growth of nearly 4% well into the middle of the decade and to add more jobs than would have been created without it.
Unsurprisingly, given how interlinked the two economies are, the impact of Biden’s stimulus bill is also expected to spill over into Canada. “The U.S. has a lot of fiscal stimulus underway and more spending on infrastructure in the pipeline,” Bank of Canada deputy governor Timothy Lane told The Wall Street Journal. “All of that is generally going to be favourable for Canada”.
Both countries were successful in administering mass COVID-19 vaccination during the first half of 2021. And in both, infection rates seemed to be falling rapidly. In Canada, at the start of April 2021, there was a confirmed weekly increase of over 10,000 cases. By July, this was down to just 2,700. The US seemed to be following the same pattern. But at the start of August, there was a significant rise in the number of new cases. This spike in infections seems to have been caused by a combination of vaccine hesitancy and the spread of the more infectious Delta variant
Quick facts about the region
North Americans are some of the world’s richest consumers. Per capita, they earn almost a third again more than Britons or the inhabitants of the eurozone and almost six times what the average Chinese consumer earns . They live in affluent, secure, well-connected societies. They’re used to banking, paying and shopping online. And the region’s e-commerce market has expanded significantly during lockdown. For any merchant looking to increase their revenues and expand their business, North America is a highly attractive market.