Monday, 18 October, 2021


Statistics Canada: GDP dropped 38.7 percent in Canada between April and June

Provided by The Canadian Press Provided by The Canadian Press
Conrad Doyle | 29 August, 2020, 15:26

The economy posted its steepest decline on record in the second quarter as COVID-19 forced businesses to close.

Economic output rebounded in May by 4.8 per cent, and by 6.5 per cent in June.

The economy contracted at annualized pace of 38.7 percent in the three months ending June 30, the government statistical agency said in a statement.

"The pull-back was widely expected at this point, though, and was still slightly less-bad than the 43% Q2 decline the Bank of Canada assumed in the July Monetary Policy Report".

While the quarterly numbers were the worst in nearly 60 years, the GDP numbers for June specifically make that month the biggest bounceback on record, too.

"It's the direction here that counts".

"Even with that gain, however, GDP would remain far below the pre-virus level".

But senior TD economist Brian DePratto warned, "Many sectors are going to continue struggling in the absence of a vaccine".

According to Statistics Canada, household spending fell 13.1 percent due to substantial job losses and few opportunities to spend as most stores and restaurants were closed and travel and tourism was restricted by the closure of the border.

Real GDP fell 11.5 per cent during the period.

Federal emergency aid, particularly through the Canada Emergency Response Benefit, more than offset that drop, the agency says, noting a 10.8 per cent increase in household disposable income. That drove up the savings rate from single digits to 28 per cent, "potentially leaving some extra cash for spending" in the coming months, said CIBC's Royce Mendes.

The Liberals are now proposing a $37 billion income-support package of benefits and changes to employment insurance when the CERB winds down starting next month, which will add to the $343 billion record deficit.

Economist and consultant Roslyn Kunin said the massive spending made sense early on in the crisis, but it may not as the economy emerges from crisis mode.

"We may be through the worst of it, but it is still a long road to normal".

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