Real gross domestic product (GDP) of the natural resources sector edged down 0.4 per cent in the first quarter, the third consecutive quarterly decline, reported Statistics Canada on Wednesday.
“The drop in the natural resources sector was modest, compared with the sharp decline in the economy-wide real GDP (-2.1 per cent) owing to far-reaching restrictions imposed to contain the spread of COVID-19,” said the federal agency.
“In the first quarter of 2020, impacts of the COVID-19 pandemic on natural resources prices and production diverged markedly by type of natural resource and activity. In the case of mining and oil and gas extraction, the effects were minimal. However, petroleum refinement activities were subject to restrictions imposed on non-essential businesses.
“Additionally, demand for and prices of natural resources were influenced by other sectors of the economy (transportation, housing, and manufacturing) and by conditions in the rest of the world, as Canada is a net exporter of natural resources. Prices of crude oil and crude bitumen plummeted, due to reduced demand and a world-wide excess oil supply in March.”
The report said real GDP of the energy subsector edged down 0.3 per cent, largely because of a 3.9 per cent drop in refined petroleum products resulting from reduced demand due to COVID-19-related restrictions on non-essential businesses.
“A 20.6 per cent decline in crude oil and crude bitumen prices, lowered the overall natural resources nominal GDP (-5.7 per cent). Nominal GDP of the minerals and mining subsector increased 1.1 per cent, while the nominal GDP of the forestry subsector was flat. Expressed at an annual rate, nominal natural resources GDP was $205 billion in the first quarter, representing 9.5 per cent of the Canadian economy,” said StatsCan.
“As a share of total natural resources, the energy subsector fell from 68 per cent in the fourth quarter of 2019 to 65 per cent in the first quarter of 2020. The shares rose for the minerals and mining (21 per cent), forestry (eight per cent), and hunting, fishing and water (six per cent) subsectors.
“Employment in the natural resources sector (-0.8 per cent) declined for the third consecutive quarter. Shutdowns of non-essential businesses and economic uncertainties contributed to job loss across all subsectors: energy (-2,300 jobs), minerals and mining (-1,190), forestry (-1,010), and hunting, fishing and water (-135).”
