Since oil now accounts for half of Canada's production-weighted commodity price index, the collapse in crude oil prices represents a big downside risk to the outlook for business operating profits. Unless oil prices rebound soon, profits could fall by as much as 30% by year-end, prompting further cuts in business investment and staff payrolls above and beyond those already announced. The potential hit to investment, incomes and employment has already persuaded the Bank of Canada to cut interest rates once and, unless oil prices rebound soon, further reductions are not out of the question.
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