A historic drop in oil prices has serious implications for the Canadian economy. "It certainly going to hurt incomes, it's going to dampen employment, it's going to surely affect western Canada quite severely," explained Philip Cross in an interview with CTV News.
When asked if he believes Canada is headed towards a recession, Cross expressed uncertainty as the Canadian economy is experiencing both the economic impacts of the drop in oil prices and the economic impacts due to the coronavirus outbreak.
"We've have experience with oil price declines, we know how they work. But we don't have experience with something like the coronavirus," says Cross. The uncertainty of how quickly the coronavirus outbreak can be contained continues to present significant challenges to economy.
"I can tell you what happens when oil prices drop 30%, but I can't tell you what happens when one third of a major economy like Italy is quarantined for a month. We just don't have any experience with that."
Bond markets are headed towards a sharp decline which signifies a long period of weak growth according to Cross.
When speaking of Alberta's economy, Cross brought some good news and explained that Canadian oil sands producers are built survive decades and major price drops. However, Alberta will be heading towards difficult times, warns Cross.