Ottawa’s economic recovery anticipated to be ‘drawn-out’, especially if second COVID-19 wave hits city

City council will hear an update on the Ottawa’s economic recovery plan and status since the city declared a state of emergency for COVID-19 in March.

According to the documents supplied Stephen Willis, general manager of planning, infrastructure and economic development, that will presented at council, the pandemic has had a big effect on Ottawa’s economy, with impacts felt across a variety of sectors. 

He says retail, food services, entertainment and accommodations have been hit the hardest.

“While recovery has commenced with the easing of restrictions and resumptions of most business activity, the pace of full economic recover is anticipated to be drawn-out and uneven give the severity of business impacts, uncertainty around the evolution of the virus, the potential for a second wave and the timing of  vaccine,” the report says. “Sectors such as tourism, accommodations and the airline industry are measuring the pace of recovery in years, not months.”

The picture, he adds, seems bleak as one survey by the Canadian Federation of Independent Businesses reported that one in seven Canadian small business are at risk of closing as a result of the pandemic. 

The survey further reported that 63 per cent of small business are fully open, 39 per cent are fully staffed and only 26 per cent are seeing normal sales volumes.

But it’s Ottawa’s tourism sector (Ottawa’s third largest economic driver) that has seen the most devastation. 

Before the pandemic, 11 million visitors spent $2.2 billion in the city annually. The sector employed $43,000 residents and generated $755 in tax revenue. 

But the ongoing impacts means Ottawa will lose about $1.4 billion in visitor spending in 2020 alone. 

Ottawa Tourism also reported postponing or cancelling over 100 major events, meetings and conventions — accounting for 83,000 delegates, 111,000 rooms, nights and $100 million in lost visitor spending. 

Year-over-year hotel occupancy is still down significantly (-58 per cent) and is projected to decline further this fall.

Ottawa’s arts, culture and heritage sector is also projected to lose between $92 million and $50 million in employment and self-employment income. 

“The COVID-19 lockdown has cooled a previous hot labour market and resulted in approximately 53,600 jobs lost across Ottawa between February and July 2020,” Willis says.

But the real story is Ottawa’s housing market — rather, the state of residential resale market in Ottawa. 

In July 2020, the average resale price of a family home was $585,000, an increase of 20 per cent over July 2019, and condo prices increased by 19.4 per cent to $358,000, according to the Ottawa Real Estate Board.

“This trend is amplified by a significant shortage of new listings,” he says. “The biggest increase is being seen in homes selling for more than $700,000, suggesting families are looking for home office space and larger backyard.”

There’s also an increase in resale activity in communities just outside of Ottawa, which is telling the City that people are not afraid to make longer commutes, he adds.

But it’s not all negative for Ottawa, Willis points out. 

“Ottawa is poised to drive post-pandemic growth and many technology companies have begun to do so,” he writes. “Economic forecasts predict Ottawa’s real GDP will decline by 2.4 per cent in 2020, with a 2.6 per cent real GDP growth annually from 2021 to 2024. The 2020 decline is the lowest decline amongst the top 13 cities in Canada and, not surprisingly, the growth recovery rate is also the lowest.”

In the end, while the City does have recovery programs set up to help local businesses, Willis says it will ultimately come down to businesses being able to adapt to operating models, continuity planning, safety protocols and a “robust digital presence.”

The next steps will be happening in the coming months. The Economic Recovery Task Team will continue to monitor and analyze the economic impacts of COVID-19 to tailor the ongoing approach to the local economic recover. 

This, Willis says, will include shift the City’s response to on that is “forward looking” and consider the longer-term implications of a prolonged pandemic or a second wave. This could result in a possible roll-back of permitted activities and/or business closures.