Statistics Canada estimates the Canadian GDP fell by about nine per cent in March which would be the largest one-month decline in GDP, since the series started in 1961.
Overall for the quarter, this flash estimate of GDP leads to an approximate decline of 2.6 per cent for the first quarter of 2020, it said in a report released on Wednesday.
“Economic disruptions have been both deep and widespread in the month of March. Among the hardest hit by social distancing measures and government restrictions have been the travel- and tourism-related industries, such as personal transportation, restaurants and accommodation. Major declines have also occurred in personal services, retailing (other than food), entertainment and sporting events, and movie exhibition. Working from home and distance learning have been growing trends across society, however, due to the suddenness and breadth of the shutdowns of government and education facilities, the volume of output in these sectors, based on actual hours worked, is calculated to decline dramatically,” said the federal agency.
“Not all sectors of the economy declined in March. Activity in the health sector, food distribution and online retailing and streaming have been growing. Despite the collapse in oil prices and the pullback in the sector’s investment activities, early indications seem to show that the volume of oil and gas extraction and pipeline transportation had not yet been substantially impacted in March as storage facilities were still being filled.”
Both the monthly and quarterly readings were materially worse than expected,” said Royce Mendes, an economist with CIBC Economics.
“It was no surprise, however, that industries including travel/tourism, restaurants/accommodation, and retailing were among the hardest hit. Given that social distancing and government mandated shutdowns were really only being heavily utilized during the second half of the month, data on April are almost surely to reveal a further decline in economic activity,” he said.
“As shocking as today’s figures are, we are in for worse as the impact of ‘full’ social distancing and other measures such as emergency declarations that shut down non-essential businesses earlier this month will only be evident in the data with the fullness of time. Uncertainty around the timing for a (likely gradual) relaxation of pandemic response measures leaves a great deal of uncertainty around the outcomes, but it seems a safe bet that more records are going to be smashed when the second quarter figures are available,” Brian DePratto, Senior Economist with TD Economics.
