Kurt Reiman, managing director and chief Canadian investment strategist at BlackRock, has watched the COVID-19 epidemic change the dynamics of the country’s economy. In an interview with The Logic, Reiman spoke about his surprisingly sunny outlook for the technology sector, the long-term viability of Canada’s oil patch and how the epidemic will be a “massive accelerant” to the decarbonization of the marketplace.

This interview has been edited and condensed for clarity.

You called the federal government’s actions in the wake of COVID-19 “nothing short of aggressive.” How much time do you think they buy us?

First of all, I think they’re moving at warp speed compared to what we saw 12 years ago in the financial crisis. And as they get evidence that this is deeper and potentially longer than they may have initially estimated, we’re finding that governments in the U.S. and Canada are adding to or extending provisions that had already been launched. It’s hard to get precision on this, but we’re thinking of this as an economic outage that lasts months as opposed to quarters. So far, though, it’s sufficient. Canada gets a gold star for coordination.

What else can the government of Canada do?

Initially, I think it’s going to be an extension of the government income replacement so that it stretches across the economy as widely as possible. Policy can make a difference, especially when it comes to small- and mid-sized businesses. It’s really Main Street here that matters. I’m also thinking beyond government to the private sector, how it can be part of the solution. I think we’re going to see much more of the banks being part of the bridging mechanism, where they can extend mortgage payments, act a bit more lightly on credit-card payments and just work within the credit channels because they are well capitalized. And that’s a big distinction from the financial crisis, when they were the source of the problem.

I was talking to a startup guy a month ago, which feels like forever now. He was rolling along nicely and then then this happened and all of a sudden he isn’t a viable business any longer, because the goalposts have shifted.

Cash flows disappeared overnight. And they don’t have a whole lot of working capital and a lot of businesses weren’t prepared for a lengthy decline in revenue. That’s a learning lesson that companies will now take. It’ll be a behavioural change.

Do you think that lesson will be learned?

I think businesses and households are going to carry a larger rainy day fund or reserve as a result of this. And more broadly, I think the crisis is an accelerant for trends that were already there. Technology has shifted from being something that’s nice to have to a staple. Now, when we think about entertainment, it’s going to be streamed into our homes. When we think about purchases, much more of that will happen online. When we think of businesses, more of our work will be done remotely, and there will be less need for face-to-face interaction. I think [of] technology as one of those sectors that fares better through the crisis. Tech companies are running businesses that are much more like utilities, in that they sell products that people can’t do without. When we have to make choices in an economically challenged environment, we keep our technology and are more likely to cancel our gym membership or not go out to eat.

We saw the Teck project in Alberta not come online because of low oil prices before the crisis. How long do you think Canada’s energy sector can sustain itself? 

I don’t know, because I don’t know if there’s some form of stimulus forthcoming. You can’t rule that out. A lot of the loan guarantees and lending that you’re seeing in the United States and other countries is not meant to be repaid. They’re more like grants. We’re already seen the banks playing an important part of the healing process, but I think it’s a question of whether you’re sustaining a viable business or not.

As recently as January, [BlackRock CEO] Larry Fink talked a lot about the necessity of decarbonization. I’m wondering what effect you think what the pandemic will have on that pledge to decarbonize.

I think it’s a massive accelerant. We know that COVID-19 is going to affect those living in more highly polluted environments. Where there’s more airborne toxins, we’ve a higher associated mortality rate. CO2 isn’t an airborne toxin, but we talk about the increased number of pathogens that are likely to emerge as the planet warms. I think that people are going to come out of this crisis thinking about how they are going to live their lives differently. Governments are likely to think [that] if we could stop the economy and avoid a broader humanitarian crisis than the one that’s already occurred, then surely there are avenues to explore where we get to a lower-carbon future. Even if we don’t believe that the spread of this virus had anything to do with a warming of the planet, can we just say that there’s a risk of further viral outbreaks as a result of climate change, and that we really don’t want this to happen again, so what can we do to limit the temperatures?