Canadian Real GDP Q1 2020 - May 29, 2020

Canadian Real GDP Q1 2020 - May 29, 2020

The Canadian economy contracted 8.2 percent at a quarterly annualized rate in the first quarter, including a 7.2 percent decline in March following the paralysis of economic activity brought on by the COVID-19 pandemic. Household spending fell 2.3 percent, the steepest drop ever recorded, while exports were down 3 percent and government spending fell 1 percent due to school closures and government curtailments.  Total housing investment was down 0.1 percent, with both renovation spending and ownership transfer costs falling. New home construction, however, rose 1.6 percent.

As dramatic as the first quarter decline appears, it will almost certainly be overshadowed by the potential for a  30 percent or more annualized decline in the second quarter,  when the impact of COVID-19 on the economy is expected to be the most severe.  Note that those are annualized estimates. The actual peak-to-trough decline in Canadian real GDP is estimated at 10-15 percent before things begin to normalize and growth rebounds in the third and fourth quarters of this year.

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