On Friday, Statistics Canada released new sector-level Gross Domestic Product (GDP) for June 2020. After much speculation, this data offers an idea of how Canada’s recovery from the COVID-19 economic crisis is likely to unfold.
In short, the resumption of economic activity has been faster than many analysts expected. This relief comes after months of record-breaking plunges in economic indicators. Figure 1 above shows that aggregate Canadian GDP in June had nearly recovered to the level of March 2020, just following the onset of the pandemic, and was about 9% below the February peak.
The steep recovery in GDP in June does not, of course, preclude additional lock-downs, and reversals in economic fortune in the fall. Many viruses, including Coronaviruses like the “common cold” are seasonal. Indeed, the high probability of a “second wave” of infections in the fall appears to be the consensus view, for whatever that is worth.
On the other hand, there are reasons for continued optimism. Progress on vaccines has been remarkable, considering that a vaccine typically takes a decade to develop. Across the developed world, COVID-19 mortality rates have fallen sharply and somewhat mysteriously across all age brackets. Statistics Canada’s June report gives Canadians the chance to breathe a sigh of relief. The crisis is far from over, but there are reasons for cautious optimism that the worst fears of a second “Great Depression” are less likely.Read more...