While the Canadian economy remains resilient, some analysts are reassessing their GDP forecast as COVID-19 rages across the country, forcing lockdowns and restrictions.
Royal Bank of Canada says restrictions in some provinces in April will put Canada’s growth streak at risk, although the lockdowns remain targeted.
“The rest of the economy has continued to grow. Still, we’ve knocked down our Q2 growth forecast slightly (to +3.5% annualized) which largely offsets assumed stronger performance in Q1—GDP for 2021 as a whole is still seen increasing by 6.3%,” RBC economist Josh Nye said in a recent report.
Statistics Canada will release monthly GDP data for February on Friday.
Bank of Canada, which expects GDP to rise by 6.8 per cent this year after declining 2.4 per cent last year, has also warned of a few headwinds.
“A more severe third wave or a more persistent pandemic would lead to additional weakness in output and employment as well as more adverse and persistent effects on confidence,” the Bank noted in its latest monetary policy report. “With a more prolonged period of weak economic activity, some risks that have diminished over time, such as labour market scarring and corporate financial stress, could re-emerge.”
Retail sales on Wednesday should also offer some insight into the health of the economy.
“The flash estimate for February GDP was +0.5%, but declines in manufacturing and wholesale volumes point to a modest downgrade to +0.4%,” Bank of Montreal economist Benjamin Retzes.
“Look for the March flash estimate to show robust growth amid broader reopenings, before April’s likely lockdown-driven contraction.”
Another key drag on the economy is shortages of semiconductors. National Bank of Canada economists believe the shortages could weigh on manufacturing and wholesale sectors, further pulling back economic forecasts.
New COVID-19 cases in Ontario hovered just under 4,000 mark on Sunday after hitting record highs throughout mid-April, while other provinces such as Nova Scotia and Manitoba, that had seemingly tamed the virus somewhat, saw a flare up over the weekend.
Ottawa is expecting to receive around 1.9 million doses of COVID-19 vaccines this week, including its very first shipment of single-dose shots from Johnson & Johnson.
The vaccination drive has picked up in recent weeks, which could improve Canada’s current 36th rank globally in terms of doses administered per 100 people.
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WAITING TO TAKE OFF: After a year of living with COVID-19, Postmedia is taking an in-depth look at the significant social, institutional and economic issues the pandemic has brought to light in Canada — and more importantly, how we can finally begin to solve them. You can find our complete coverage here.
Gabriel Friedman writes about how COVID-19 sent airport revenues off a cliff, and forced them to take a long, hard look at where they go from here. has the details.
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As Canada marked the end of the first year of the COVID9 pandemic, price growth in March 2021 was accentuated by what is known as base-year effects, originating in March 2020. The broad decline in prices in spring 2020, when headline CPI growth slowed to 0.9% in March 2020, had an upward impact on consumer inflation in March 2021. As the upward impact of these temporary base-year effects will influence the 12-month movement over the next few months, the historical movements affecting current growth trends will be examined. Read more here.
The pandemic wreaked havoc in the job market. Company shut-downs and economic restrictions sent unemployment rates soaring. However, with lockdowns lifting, Canada has seen some relief, with over 250,000 jobs added this past Feb. Not surprisingly, there will be huge competition vying for each of these positions.
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