Canada: GDP recovery continued in February and March

Data released on Friday in Canada showed GDP rose 0.4% in February according to the advanced estimate, slightly below the market consensus. CIBC analystspoint out that the economy at the end of March was as close to its pre-COVID level as it has been since the pandemic began.

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“The pause between the second and third waves of the virus caused the Canadian economy to regain more ground. At the end of March, the economy was operating as close to the pre-COVID level as it has since the pandemic began. That said, the data is about to change. Employment figures to be released next week will reveal the pain many businesses and employees felt in April. It will likely be in stark contrast to the US figures, where the economy was still gathering momentum. The good news is that the information from the break between waves reveals how quickly Canadian activity can recover when the virus is contained. “

“The February GDP advance of 0.4% was somewhat slower than the consensus had predicted, but it came together with a preliminary estimate for March that showed growth acceleration to 0.9%. This caused the economy to grow only 1.3% below the pre-COVID GDP level, and the first quarter followed SAAR growth of just over 6%, just shy of the Bank of Canada forecast. “

“Data for the first quarter shows that the economy was very resilient to the second wave of the virus and grew even more during the hiatus. However, we will have to wait and see how much pain this latest surge in COVID cases will inflict. We are less optimistic than the Bank of Canada in the second quarter of this year, given how tight the restrictions have had to be and the fact that there could be less compensation for the weakness of services from some goods sectors. We will have a better idea of ​​how the third wave is affecting the economy after next week’s employment data. “