Basically, our models projected that the economy would go through the reverse of its experience in 2010–14, when high oil prices led to strong increases in business investment and national income. Provinces where the energy sector is relatively more important, such as Newfoundland and Labrador, would feel these effects most acutely.
This underscores one of the fundamental challenges for policy-makers, that economic shocks can have very different effects across Canada’s regions. In terms of adjustments, we anticipated that lower oil prices would mean not only a decline in the energy sector, but also a pickup in growth in the non-energy sector. We expected exports to be boosted by a lower Canadian dollar.