Canada economy roars back with record 40.1% rise in Q3

OTTAWA– Canada’s economy rebounded at a record annualised pace of 40.1% in the third quarter after the country emerged from a pandemic lockdown, the government statistical agency said on Tuesday.

The upturn – which fell short of analysts’ expectations – reflected substantial increases in housing investment and household spending, as well as a surge in exports due to growth in major trading partners’ economies.

The massive increase in gross domestic product (GDP) erased a deep plunge of more than 38% in the previous three months, but the momentum may already be fading as a second wave of Covid-19 – more deadly than the first – forced several regions to reintroduce measures to slow the illness’ spread.

“The economic recovery in Q3 wasn’t as sharp as had been expected, but still took GDP miles above where it stood during the depths of the crisis,” commented CIBC analyst Royce Mendes in a research note.

He said that a 0.2% advance in October from the previous month was a positive start to the fourth quarter, but added that “the economy faces a December with harsh restrictions that will likely see another contraction in economic activity.”

From quarter to quarter, the Canadian economy grew 8.9%, following an 11.3% drop in the second quarter and a 1.9% decline in the first, Statistics Canada said in a statement.

The data’s release comes one day after Ottawa projected its budget deficit this year would balloon to C$382 billion and unveiled the largest economic relief package since the Second World War – between C$70 billion to C$100 billion over three years starting in April 2021 to jolt the economy once the pandemic is over.

The government has spent hundreds of billions of dollars to support out-of-work Canadians and businesses that were forced to close temporarily.

Notably, C$1 billion was spent on vaccine agreements to secure 429 million doses from seven pharmaceutical firms, and C$322 billion went to Canadians directly, so far.

Public Health officials said last week that Covid-19 vaccines could begin to be rolled out starting in January with most Canadians expected to be inoculated by September 2021.

As of Monday, there were more than 66,000 active cases of Covid-19 in Canada.

Since the start of the outbreak, nearly 300,000 have recovered, while 12,000 died. – AFP, December 2, 2020