Data released on Tuesday showed an unexpected contraction during the second quarter in GDP growth in Canada. According to National Bank of Canada analysts, growth should pick up during the third quarter to a decent rate supported by commodity prices and the easing of health measures.
Key Quotes:
“The drop in Canada's GDP in the second quarter came in as a surprise, as GDP by industry including the preliminary June estimate showed a 2.5% growth a month ago. This has been reduced to a flat print after significant revisions to prior months. This is the worst among the G-7 countries, an underperformance due to the health measures that have held back the economic recovery.”
“Canada's nominal GDP is now 5.1% above its pre-recession peak, the best performance in the G7. The jump in resource prices contributed to this development, with the terms of trade at their highest level since 2008.”
“Despite the disappointing preliminary reading for July GDP, we continue to expect decent economic growth in Q3 as commodity prices hold up and the easing of health measures allows consumers to spend after months of forced frugality.”
“Growth could be affected by supply difficulties in the automotive sector that could last until the end of the year.”
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