Since the price of oil began its long slide in the second half of 2014, Canadians have been calculating — and then recalculating — the deepening economic impact. Business and government leaders are struggling to adjust their forecasts as barrels of West Texas Intermediate and Brent Crude both sit on the wrong side of $50. Prices were expected to fall as the global economy slowed, but not this rapidly.

“The magnitude of that drop is significant,” said Sadiq Adatia, chief investment officer of Sun Life Global Investments in an interview with me last week. “I don’t think anybody was expecting it.”

It’s bad news for a Canadian economy still struggling to bust out of an extended period of slow growth. By Adatia’s calculation, our national economy is losing about $38 billion a year with oil at $50 a barrel. That’s after savings at the gas pump are factored in. “It equates to about a 2% [drop in] nominal gross domestic product,” he told me.

Losses in the oil patch quickly turn into lower government revenues and hard times in a range of related industries. Westerners will feel it most, but they won’t be alone. Any gains that manufacturing centres like Ontario and Quebec hoped to see from a strengthening U.S. economy are likely to be offset by the ripple effect.

Oil prices aren’t the only concern.

“We still have the high debt levels that we were worried about,” said Adatia. “We were always worried about the real estate market.”

What comes next? Adatia made three predictions:

1. The Canadian stock market will end the year in negative territory

Oil prices are down sharply, so there might be some minor gains there as the year progresses. But on the whole, Canadian stocks will not have a good year. “If we start to see other parts of the economy falter as well, I just can’t see Canada having a positive return in the equity market,” he said.

2. Bond yields will rise slowly

The bond market could end 2015 in positive or negative territory. Expect the number to be low, either way. There’s a potential scenario where investors favour our debt over bonds in other parts of the world, despite domestic weakness here.

3. Global markets will be mixed

Countries that are net importers of oil — like India and Turkey — will benefit. Net exporters like Russia and Venezuela are in for a rough year. The eurozone’s continuing difficulties will have an impact, too. “If quantitative easing comes and you get a good lift, you could start seeing international markets have a decent year. If we don’t see that happening, or it’s not to the extent that people are looking for, international markets could take it on the chin.”

This is an environment in which first principles will serve investors well. “It’s not going to devastate your portfolio to have bonds,” said Adatia. “You still want to have that balance between equities and bonds to protect your portfolio.”