Canada Economy Shrank Most on Record in 1Q, Early Data Show
(Bloomberg) -- Canada’s economy probably contracted by the most on record in the first quarter as social-distancing measures and widespread business closures brought commerce to a standstill.
Gross domestic product declined by 2.6% in three-month period from the previous quarter, according to preliminary estimates released Wednesday by Statistics Canada. The numbers -- which aren’t annualized -- are much worse than many economists have been forecasting, suggesting the recession began with a sharper decline in output than feared.
Economists were anticipating a quarter-over-quarter decline of slightly below 1%, according to a Bloomberg News survey earlier this month. If the 2.6% figure were annualized, it would be closer to a 10% decline, which would be the largest quarterly contraction on record.
A slowdown of activity in March pulled the overall quarter down, with monthly GDP shrinking 9%. That’s the biggest one-month decline since at least 1961, Statistics Canada said.
Half-way through month, the federal and provincial governments implemented lock downs of non-essential businesses. Given that these measures to curb the spread of COVID-19 are likely to continue for weeks, it’s likely April’s GDP figures will look even worse.
“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,” Royce Mendes, an economist at Candian Imperial Bank of Commerce, said in a note.
Statistics Canada’s first ever “Nowcast” gives a preliminary look at the damage Covid-19 has inflicted on the Canadian economy, and is being released early to help officials craft policies to respond to the crisis. Official first-quarter GDP data is still set to be released May 29.
(A previous version was corrected to show 2.6% decline was for first quarter)
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