Canadian economy posted record drop in second quarter due to pandemic
Nearly every single component of the economy used to calculate GDP was at its lowest point over April, May and June _ driven largely by widespread lockdowns in April.
The second quarter of 2020 was largely expected to be the worst three-month stretch for the economy this year before the country begins what is expected to be a long, bumpy road to a recovery.
Economic output rebounded in May by 4.8 per cent, and by 6.5 per cent in June.
The agency's preliminary estimate for July indicated a three per cent increase in real GDP, which on its own would have been a monthly record prior to this year, BMO chief economist Douglas Porter said.
"Even with that gain, however, GDP would remain far below the pre-virus level".
Tiff Macklem, the Bank of Canada governor, told an worldwide gathering of central bankers Thursday that small and medium-sized businesses - especially restaurants and the hospitality sector - may not be able to reopen even as COVID-19 restrictions are eased.
That will be especially the case in sectors such as restaurants and hospitality, where people are in close proximity.
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"We're seeing some rather impressive bounce amounts as the market reopens", Macklem mentioned on a digital panel hosted by the Federal Reserve Bank of Kansas City.
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.
Much of the money went toward emergency aid programs the government announced as businesses shuttered and workers were laid off, furloughed or had their hours slashed.
That drove the household savings rate up to 28 percent, from seven percent, "potentially leaving some extra cash for spending in upcoming periods", he said.
"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.
The Liberals are proposing a $37-billion income-support package that would extend the CERB by four more weeks before winding it down and replace it with a trio of benefits and changes to employment insurance, which will add to the $343-billion record deficit. The bureau said authorities spending will stay high while economic action takes decades to recuperate, and cautioned it could have to additional downgrade the nation's credit score if shortages and debts were not brought under management.
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