May 29, 2020 / 1:05 PM / a month ago

Instant View: Canada's GDP growth in April plunged by a record 11% from March

TORONTO (Reuters) - Canada’s economic growth in April plunged by a record 11% from March as large sections of the economy were shut down to fight the coronavirus outbreak, Statistics Canada said in a flash estimate on Friday. Canada’s economy contracted at an annualized pace of 8.2% in the first quarter, StatsCan added.




“The flash estimate was a 9% decline in March; instead it’s been revised to a decline of 7.2%. That’s a massive difference… it will be interesting to see if there’ll be any revisions to the annual call. This is quite a significantly less bad starting point than we believed.”

“We’re still expecting a devastating hit in the second quarter... We’re probably looking at a decline in GDP at the annual rate of more than 40%.”

“Whether the economy declines 5, 6, 7 or 8% this year, it’s still an extremely challenging backdrop that’s going to require a lot of support from both monetary and fiscal policy...We have to wait to hear from the new Bank of Canada governor... but I suspect we probably have not heard the end of steps by the Bank and probably by the Fed as well.”


“In March we saw a significant hit to GDP. They (Statistics Canada) are looking for an even larger drop in April. It fits with the story we have seen.”

“I think it is too early to make big picture pronouncements on the economy. The big question here has always been the bounce back. How quickly do we rebound through June, through July, through August and this just doesn’t offer us any insight.”

“In the departing governor’s words, we are seeing something that is consistent with the better case scenario for the Canadian economy.”


“The GDP numbers are exceptionally soft still, but a little bit less soft than the advanced estimates Statistics Canada gave us earlier for March. We also had the advance estimate out for April was included, so that was another 11% drop to the 7% drop we had in March, so it’s still a really unprecedented two months’ economic downturn. A little bit less severe than I think the fear was even a month ago, but it’s still an unprecedented drop.”

“It leaves quarterly growth in Q2 tracking at the high end of the scenarios that (the Bank of Canada) laid out in their last Monetary Policy Report. But the big question is how fast can the recovery be and there are wide uncertainty bands around how fast that can be, and that depends not just on economics but also on the spread of the virus and whether and how long containment measures need to remain in place... The Bank of Canada is going to keep piling liquidity into the system as much as necessary to make sure you’re not adding financial credit shock on top of what’s already a really severe economic shock.

Reporting by Fergal Smith, Moira Warburton and Nichola Saminather; Editing by Denny Thomas

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