We all experienced it — the shock, fear and uncertainty of the COVID-19 outbreak in early 2020. For most of us, the lockdown months of March, April and May will be etched in our minds forever.
But like those living with chronic pain or diseases, now that the initial shock has subsided, we are learning to live with COVID. The virus has not gone away and a vaccine is not yet available, so it’s not over. Nonetheless, life goes on. Alberta’s economy is starting to re-open and businesses are salvaging what they can this summer.
We’ve been told all along that restarting the economy isn’t a light switch that goes on-and-off — it’s more of a dimmer switch. And the speed at which we turn the light back on will affect the second wave of the virus.
How do we navigate this gradual re-opening? What can Alberta businesses expect? And what will 2021 look like? There are no straightforward answers to these questions, but it’s helpful to imagine some scenarios.
Here are four ways the COVID crisis could affect Alberta’s economy in the coming months.
1. The koala. A koala is possibly the most adorable creature on the planet. It’s also mostly harmless and defenseless. A scratch of its sharp claw is all you’d suffer.
In the koala scenario, we let down our guards, we open up the economy with no hesitation, and we relax. And nothing happens! The COVID-19 virus simply goes away and the economy rebounds almost overnight in the much-desired V-shaped recovery.
This scenario isn’t a complete fantasy. The SARS virus, which was a similar type of coronavirus, did just that. But it’s almost a complete fantasy. Scientists are telling us that the COVID-19 virus is highly unlikely to simply disappear. And that means world oil prices are likely to stay low for longer.
Belief in the koala scenario — that this is all much ado about nothing — was more popular back in February and March. And there are still those convinced it’s a hoax or have a conspiracy theory to explain it. These are the people who argue that we’re destroying our economy for nothing. However, those voices are becoming less credible as time goes on.
2. The tarantula spider. They look terrifying, but are harmless to humans. (They got their bad reputation from Hollywood. When the movie scene called for a dangerous spider, they used tarantulas specifically because they looked scary but posed no harm to the actors.)
In the tarantula scenario, we discover that the economic damage is not as bad as we feared. Slamming shut Alberta’s economy for a few months caused a lot of short-term pain, but we flattened the curve and the V-shaped recovery we were hoping for is still in the cards. The recession that some had predicted would last for months (or years) will be over before we know it. The global economy will rebound quickly and oil prices will rally.
This scenario is also unlikely. Will the economic impact of the pandemic prove to be as harmless as a tarantula? So far, that doesn’t seem to be the case. Because of the health effects of the virus and the shut-downs put in place, 2020 is already on track to be one of the worst economic years in Alberta’s history. It’s too early to tell if the economy will rebound in 2021, or enter a prolonged, multi-year downturn, but the economic pain is real and its after-effects will be around for some time. Some of our fear of this tarantula is perhaps warranted.
3. The grizzly bear. In a photo they appear cute and cuddly, but any prudent hiker knows coming face-to-face with a grizzly bear is terrifying. If you react badly or get between it and its cub, the bear will rip you to shreds. But if you do what experts advise and back away calmly and slowly, the bear is more likely to scamper away and leave you unharmed.
COVID’s impact on Alberta’s economy may be the grizzly bear scenario. Most Albertans have been reacting with the appropriate fear and proper respect—like the hiker backing away. But does the grizzly bear attack us anyway, or does it eventually wander off back into the woods?
Again, we don’t know for sure. However, it’s likely the precautions we are taking by closing the economy and allowing only a gradual reopening—as painful and frustrating as this is—will result in a non-fatal economic outcome and a rebound in 2021. However, if we do nothing and re-open too quickly (i.e. show the bear no respect), things are likely to go badly for us indeed.
4. The hippo. “I want a hippopotamus for Christmas” went the jingle for a phone company TV ad several years ago. But you really do not want a hippopotamus. They’re deadly, accounting for more human deaths in Africa than any other animal. Don’t let their bumbling, cute appearance fool you.
The hippo scenario would see Alberta’s economy ravaged because we don’t take adequate precautions. Like the inexperienced safari tourist, you get too close to the hippo and you’re in big trouble.
This scenario could play out if Albertans throw in the towel on COVID precautions and quit trying. Government officials can warn people, shame people and even ticket people for not social and physical distancing—but if we ignore the warnings and drop our guard, the virus’ second wave is likely to come back with a vengeance. That, like a hippo attack, could be fatal, sending the economy into a multi-year recession or even something approaching a depression.
What economic scenario will it be?
Will it be the koala, where we do nothing and nothing happens? The tarantula, where we panic for no good reason? The grizzly bear, where we react with fear and respect but come out of it alive? Or the hippo, where we ignore the warnings and the economy gets mauled?
The koala is the most desirable by far, but sadly it’s the least likely. The tarantula is more probable, but COVID-19 has already proven that it’s not harmless. The hippo is also possible, but, at least so far, most Albertans have proven they’re (mostly) willing to take precautions.
That leaves the grizzly bear as the most likely scenario. We’ve encountered a deadly animal on the trail, but we’re doing what we’re supposed to do—slowly and carefully backing away. The grizzly could still attack, sending the global and Alberta economy into a longer, multi-year tailspin. Yet chances are better that the bear will turn and run away. This year is still going to be brutal for the economy, businesses and workers. But if we do the right thing and use extreme caution as we learn to live with COVID, 2021 holds the promise of a gradual—if not hesitant—economic recovery for Alberta.