Following a dramatic slide due fears stemming from the COVID-19 (or, coronavirus) outbreak, markets saw a slight improvement. However, concerns over the economic impacts of the COVID-19 outbreak continue to loom over the Canadian economy.

In an interview with CTV, MLI Munk Senior Fellow Philip Cross stated that the domestic economic consequences of COVID-19 now hinge upon how well authorities will be able to contain the outbreak over the next four to five weeks. Citing a report by the head of the Institute of Supply Management in the US, Cross explains that the most immediate economic impacts from COVID-19 stem from a supply shock.

If the situation persists, Cross explains the supply shock could transform into a demand shock which would have more direct economic impacts such as layoffs. "Lower incomes, lower employment and then we see the impact of this on the economy through the rest of the year," warns Cross.

On top of that, global markets were in an already risky situation prior to the COVID-19 outbreak, and fears of recession have only been amplified since.

"The economy was in a very vulnerable spot to begin with and that's partly probably why we're seeing such a strong impact of this on the financial markets," says Cross.

On advice to investors during this turbulent time, Cross argues that the best way forward is to have a diversified portfolio that is geared toward the long-term.

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