Retail sales have declined sharply since March 2020 in Canada as many consumers reined in their spending, particularly on big-ticket items such as automobiles and durables, during the COVID-19 epidemic. Discretionary spending was not a priority for many Canadians as businesses were forced to close as a result of the measures taken to manage the spread of the virus, leading to lower consumer confidence and a more cautious approach to managing personal and household budgets as incomes were threatened.
The Canadian government is providing emergency benefits to its citizens as part of its COVID-19 Economic Response Plan. The measures introduced include the Canada Emergency Response Benefit (CERB), which provides a taxable benefit of CAD2,000.
Although student enrolments are likely to fall somewhat in the autumn of 2020, education gross lending is expected to hold up relatively well over the year. The government introduced its Canada Emergency Student Benefit which provided financial support to post-secondary students and recent graduates who were unable to find work due to the COVID-19 epidemic.
After the consumer caution witnessed around lending during the COVID-19 epidemic in 2020, pent-up demand is expected to lead to a rapid return to strong growth in gross lending as early as 2021. Strong growth is also expected over the following years to drive a stronger CAGR in constant 2020 value terms over the forecast period than that registered over the review period.
The outstanding balance has been less affected by the COVID-19 epidemic than gross lending, maintaining steady growth in 2020, which is expected to continue throughout the forecast period. Some consumers may experience difficulties in the immediate forecast period after the impacts of the pandemic on their employment status and personal and household incomes.
After the negative effects of the COVID-19 epidemic on personal and household incomes, some consumers may well have difficulties in card repayments over the forecast period. Non-performing cad lending had declined in 2019, but there have already been signs of these issues as delinquencies are set to rise in 2020.
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Understand the latest market trends and future growth opportunities for the Consumer Credit industry in Canada with research from Euromonitor International's team of in-country analysts – experts by industry and geographic specialisation.
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This report originates from Passport, our Consumer Credit research and analysis database.
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