COVID-19 took a record toll on Canada’s economy during the second quarter.
Real GDP fell 11.5 per cent during the period. Expressed at an annualized rate, it fell 38.7 per cent.
It’s the worst showing for GDP since Statistics Canada started tracking it in 1961 and follows a 2.1 per cent drop, 8.2 per cent annualized, in the first quarter.
Business investment fell a record 16.2 per cent due to shutdowns, travel restrictions, work and school at home, as well as uncertainty about the global economy.
“The good news is that disposable incomes actually increased during the period as government support more than offset the drag from the sharp rise in unemployment,” said CIBC senior economist Royce Mendes.
“That drove the household savings rate up to 28 per cent from 7 per cent in the prior quarter, potentially leaving some extra cash for spending in upcoming periods.”
The month-over-month data for June showed a 6.5 per cent rise, further suggesting the economy began to turn a corner.
Statistics Canada estimates a 3.5 per cent expansion in July in its latest flash estimate.
“That would put GDP on track to follow the record drop in the second quarter with a record expansion in the third, of 45 per cent annualized,” said Capital Economics’ senior Canada economist Stephen Brown.
“Even with that gain, however, GDP would remain far below the pre-virus level. And while the announcement of a big fiscal stimulus next month could boost the outlook, for now at least we think it will take until early 2022 for GDP to return to its pre-virus level.”
Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.