July 31, 2020: The Canadian economy rebounded in May, posting growth of 4.5 percent as activity bounced back following two months of sharp declines due to the coronavirus pandemic, the government said Friday.
The recovery is likely to continue in June, according to Statistics Canada, which currently forecasts a 5.0 percent monthly expansion.
The virus crisis and measures to control its spread caused the Canadian economy to contract sharply in March and April, with historic GDP losses of 7.5 percent and 11.7 percent, respectively.
Statistics Canada said the data point to “a decline of about 12% of real GDP in the second quarter of 2020” compared to the first quarter.
Benoit Durocher, economist at Banque Desjardins, said that the drop is equivalent to “a fall of 40% at an annualized quarterly rate” — worse than the 32.9 percent contraction of the US economy.
Royce Mendes, an economist at CIBC bank, said the damage was worse in Canada because authorities imposed restrictions sooner and kept them in place longer than the US did.
“The good news is that the more cautious reopening has kept virus cases under control north of the border, suggesting Canada's economy is in a position to outperform that of the US in Q3,” Mendes said in a research note.
Production in May increased in several sectors, including manufacturing, commerce, construction and hotels.
Although Canada's provinces and territories started reopening sectors of their economies to varying degrees in May, offsetting some of the losses in the previous two months, Statistics Canada said “economic activity remained 15% below February's pre-pandemic level.”