OTTAWA—Statistics Canada says the economy posted its steepest decline on record in the second quarter as the COVID-19 pandemic forced the closure of non-essential businesses and slowed the economy to a crawl.
The agency says real gross domestic product contracted at an annualized rate of 38.7 percent for the three-month period, the worst showing since the start of 2009 at the height of the global financial crisis.
Economists had expected a contraction in the quarter at an annualized rate of 39.6 percent, according to financial markets data firm Refinitiv.
Almost every single component of the economy used to calculate GDP was at its lowest point over April, May and June—driven largely by widespread lockdowns in April.
Economic output rebounded in May by 4.8 percent, and the agency says June posted an increase of 6.5 percent.
The agencys preliminary estimate for July indicates a 3-percent increase in real GDP.
The second quarter of 2020 was largely expected to be the worst three-month stretch for the economy this year before the country begins what is expected to be a long, bumpy road to a recovery.
Even with the gains in June, economic output is about 9 percent below pre-pandemic levels, Statistics Canada says.
On Thursday, Bank of Canada governor Tiff Macklem told an international gathering of central bankers that not all small and medium-sized businesses are going to be able to reopen even as restrictions to contain COVID-19 are rolled back.
That will be especially the case in sectors such as restaurants and hospitality, where people are in close proximity.
“We are seeing now some very impressive rebound numbers as the economy reopens,” Macklem said on a virtual panel hosted by the Federal Reserve Bank of Kansas City.
“Thats a really good thing, but not all parts of the economy are going to be able to reopen for some time, and so we expect that after this first phase, its going to be a pretty long, bumpy phase.”
The record decline in output over the last quarter, which was the worst posting for the economy over six decades of comparable data, was fuelled by record drops in spending as businesses stayed closed, Canadians ordered to stay home and millions out of work.
Household spending on goods was down by 8.4 percent, and down 16.7 percent for services.
Business investment fell 16.2 percent, which Statistics Canada says is a result of plant closures, low oil prices, and heightened econoRead More – Source
