Canada’s economy shrank at the fastest pace on record in the second quarter, as consumer spending, business investment, imports and exports all dried up because of COVID-19.
Statistics Canada reported Friday that the country’s gross domestic product shrank by 11.5 per cent in the three-month period between April and June. That’s a 38.7 per cent pace of contraction for the year as a whole, far and away the steepest and fastest decline on records that date back to 1961.
At 11.5 per cent, the quarterly contraction was better than the 12 per cent that Statistics Canada had been forecasting, but still more than twice as bad as the lowest point hit in the financial crisis of 2009, when the worst three-month period for GDP came in at -4.7 per cent.
The numbers show in stark relief just how pronounced the slowdown caused by the sudden shock of COVID-19 was. But they also seem to suggest that a corner has been turned, and a rebound back up may be equally swift.
While the second quarter was the worst quarter for Canada’s GDP in almost 60 years, the numbers for June specifically make that month the biggest bounceback on record, too.
June’s GDP grew by 6.5 per cent from May’s level as provinces reopened their economies and consumers and businesses started spending again. But the economy has yet to fully bounce back to where it was. Even after June’s strong numbers, Canada’s GDP is still 9 per cent below where it was in February.
Retail sales have fully recovered, but key industries like manufacturing, construction and the energy sector have yet to get back to their pre-pandemic levels of output, the numbers released Friday show.
Preliminary data for July suggests the economy grew by another three per cent that month from June’s level, which is why economists are hopeful that the recovery that is underway will be enough to get the economy fully up and over the hole it fell into during the first wave of COVID-19.
“Because the weakness was entirely front-loaded — the economy was essentially shut in April — there are already plenty of signs that growth will snap back with purpose in Q3,” Bank of Montreal economist Doug Porter said of the numbers.
Brian DePratto at TD Bank was cautiously optimistic about the forecast. “As significant as the damage was, it was largely contained to March and April,” he said. “We may be through the worst of it, but it is still a long road to normal.”