City of Surrey Financial Plan 2020-2024

FINANCIAL OVERVIEW ECONOMIC OVERVIEW

INTERNATIONAL At the time of publishing of this document, COVID-19 pandemic had claimed close to 600,000 lives and infected more than 13.5 million people worldwide. The health crisis has hit developing and emerging countries the hardest. In advanced economies, the virus had been mostly under control until the recent resurgence of cases in the United States (“US”). Prior to the pandemic, the International Monetary Fund (“IMF”) had forecasted global Gross Domestic Product (“GDP”) to grow at 3.3% in 2020. Despite large-scale monetary and fiscal responses, nations across the globe will be in deep recession this year. The IMF downgraded the global economic outlook for this year, forecasting GDP to drop by 4.9% due to the large economic shocks caused by COVID-19. Advanced and emerging/ developing economies are forecasted to shrink by 8% and 3%, respectively. The IMF is forecasting an economic contraction of 8.4% in Canada, 8% in the US and 10.2% in the Eurozone and United Kingdom. China’s economy is forecasted to grow by 1% this year. To contain the spread of the virus, countries around the world implemented lockdowns and other measures causing shocks to both the supply and demand of goods at the same time; no sectors or industries were spared from the economic fallout. Although many countries have eased restrictions on businesses and travel, consumer demand and business investment are expected to be muted this year. High unemployment, coupled with ongoing economic uncertainties, will continue to restrain consumption. Businesses and investors will hold back investments given the unpredictable economic outlook. The pandemic has caused great disruption to individual’s lives and the way business is conducted. Public health responses to fight the virus have altered consumer behaviours along with business models and supply chains. Increased use of e-commerce is evident during the pandemic. The technology sector will continue to thrive to meet changing consumer and business needs. The disruption to supply chains has made businesses re-evaluate their reliance on single sources for supplies and the risk of just-in-time delivery systems. The procurement of supplies from different countries brings increased costs and lessens efficiencies. Some firms have increased inventories in response to shortages. The pandemic forced many countries to look at internal capabilities rather than relying on international suppliers. The shortages of personal protective equipment and medical supplies have caused nations to restrict exports and take up a protectionist stance on trade. There are increased calls in some countries to have sovereignty and government intervention for key industries. The tensions between the US and China have not eased during the pandemic. Relations between the world’s two superpowers have worsened due to the American criticism of China’s handling of the COVID-19 outbreak and China’s tightening of control over Hong Kong. China swiftly reacted saying that it will not tolerate the US’s interference in its domestic affairs. As the world’s two largest economies battle over technologies and economic supremacy, worsening tensions cause concern as retaliatory actions will have spillover effects to other parts of the world.

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