Thursday, March 28, 2024
ADVT 
National

Statistics Canada says first-quarter GDP worst showing since 2009

Darpan News Desk The Canadian Press, 29 May, 2020 06:19 PM
  • Statistics Canada says first-quarter GDP worst showing since 2009

Canada's economy had its worst quarterly showing since 2009 through the first three months of 2020, and may be headed to an even steeper drop, as steps taken to slow the spread of COVID-19 forced businesses to close and lay off workers.

Gross domestic product fell at an annualized rate of 8.2 per cent in the first quarter, including a 7.2-per-cent drop in March as restrictions by public health officials began rolling out during the month, including school closures, border shutdowns and travel restrictions.

Events earlier in the quarter also had a drag on GDP with Statistics Canada pointing to the Ontario teachers' strike and rail blockades in February, as well as a drop in oil prices.

The drastic drop in gross domestic product likely doesn't fully reflect the experience of every Canadian through this episode, said BMO chief economist Douglas Porter.

"You don't get the entire picture just from GDP and even from employment because policymakers have stepped up with such unusual and aggressive actions that a lot of the common metrics just don't apply 100 per cent in this episode," Porter said in an interview.

A preliminary estimate released by the Finance Department says the federal government posted a deficit of $21.8 billion for the fiscal year that closed in March. The figure will still be subject to revisions, which may land it closer to the government's last estimate of $26.6 billion, up from the $19.8 billion forecasted in last spring's budget.

The Finance Department's fiscal monitor says revenues hit $334.3 billion, a 1.8 per cent increase, compared to the previous fiscal year. Spending was up 4.7 per cent to over $331.4 billion, while public debt charges increased by 5.1 per cent to almost $25.9 billion.

The net federal debt pushed past $794.4 billion.

Additional spending rolled out in recent weeks is likely to push the debt even higher as the budget office has warned the deficit for this fiscal year could hit $260 billion as the government flows income supports to Canadian households.

Statistics Canada said household spending, a backbone of the Canadian economy, was down 2.3 per cent in the first quarter of 2020, the steepest quarterly drop ever recorded.

The drop in household spending was broad, affecting goods and services.

Statistics Canada said new car purchases were down 8.8 per cent, trucks and vans by 9.4 per cent and used cars by 10.1 per cent owing to "income uncertainty," more people working from home and the closure of dealerships in some provinces, including Ontario and Quebec.

Housing spending on clothing and footwear dropped as well by 16.4 per cent, as did spending on food, beverage and accommodation services — by 10.9 per cent — and air transport — by 15.7 per cent — as bars and restaurants were ordered closed and travel restrictions kicked in.

Instead, spending on going out became money spent staying in, Statistics Canada said.

Spending on food and non-alcoholic beverages increased by 7.2 per cent in the first quarter, while there was a six per cent rise in spending on alcoholic beverages.

As a result of less spending overall, the savings rate rose for the quarter to 6.1 per cent from the 3.6 per cent recorded in the fourth quarter of 2019 with higher rates recorded at higher income levels.

The savings some households have built up during the shutdown period could translate into extra spending as restrictions are eased and businesses reopen, says CIBC senior economist Royce Mendes.

"Overall, the economy has likely troughed at least for now, with businesses beginning to reopen," he wrote in a note. "Look for the economic data to begin showing signs of revival over the summer months, even if it only represents the low-hanging fruit of eased restrictions."

Similarly, TD senior economist Brian DePratto wrote in a note that it isn't unreasonable to think a modest recovery may already be forming.

"The key question is what kind of recovery? Given the significant hits to incomes and longer-lasting impacts on some industries, a marathon appears more likely than a sprint," he wrote.

The national statistics office said preliminary information indicates an 11 per cent drop in GDP for April, but that figure is likely to be revised as more information becomes available.

"Nonetheless, the March and April decreases are likely to be the largest consecutive monthly declines on record," the agency said in an online post this morning.

Similarly, the agency said first-quarter figures are likely to have larger than usual revisions in subsequent data releases as some numbers had to be estimated because they were not available on time.

MORE National ARTICLES

Car-sharing service Turo says launch into B.C. market is 'imminent'

Car-sharing service Turo says launch into B.C. market is 'imminent'
Fans of car-sharing services in British Columbia are about to get another option within weeks of the closure of two other car-share businesses in the province.

Car-sharing service Turo says launch into B.C. market is 'imminent'

New cat virus found at B.C. SPCA prompts science journal publication

New cat virus found at B.C. SPCA prompts science journal publication
The outbreak of a fast-spreading disease at the SPCA's animal centre in Vancouver has led to the discovery of a new feline virus that affected 43 cats in B.C.

New cat virus found at B.C. SPCA prompts science journal publication

Two B.C. care homes get extra help to deal with COVID-19 outbreaks

Two B.C. care homes get extra help to deal with COVID-19 outbreaks
Specialized health teams have been sent to fight COVID-19 outbreaks at two Metro Vancouver long-term care homes. The Fraser Health Authority appointed a pandemic response director on Thursday at Langley Lodge, where more than 20 people have died from the virus in recent weeks.

Two B.C. care homes get extra help to deal with COVID-19 outbreaks

B.C. takes precautions as it moves to restart in-person court hearings

B.C. takes precautions as it moves to restart in-person court hearings
Courthouses and courtrooms around British Columbia are being assessed to ensure they meet health and safety requirements as the province moves to resume in-person hearings during the COVID-19 pandemic.

B.C. takes precautions as it moves to restart in-person court hearings

Canada a series of 'regional epidemics,' top doctor says as provinces hit snags

Canada a series of 'regional epidemics,' top doctor says as provinces hit snags
Different regions face distinct challenges in emerging from COVID-19 lockdowns, Canada's top public health doctor noted Thursday as New Brunswick had to suspend its legislature, Ontario saw a jump in cases and Manitoba grappled with loosening restrictions on gatherings.

Canada a series of 'regional epidemics,' top doctor says as provinces hit snags

Cash Exodus: COVID-19 pandemic could accelerate shift to cashless, experts say

Cash Exodus: COVID-19 pandemic could accelerate shift to cashless, experts say
Some businesses reopening with pandemic protocols in place have said they won't accept cash for the time being, potentially accelerating what the Bank of Canada describes as a decade-long shift away from the banknote.

Cash Exodus: COVID-19 pandemic could accelerate shift to cashless, experts say