Pandemic puts brakes on GDP recovery
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Hey there, time traveller!
This article was published 04/11/2020 (699 days ago), so information in it may no longer be current.
Despite a modest increase of 1.2 per cent in August, output of goods and services in Canada at summer’s end was running about five per cent below where it was in February, before the coronavirus shut down much of Canadian industry. August’s meagre recovery may, however, be about as good as it gets while a virus-blighted autumn fades into a long, dark Canadian winter.
Statistics Canada reported last Friday that Canada’s gross domestic product grew 1.2 per cent in August following a 3.1 per cent increase in July. By the agency’s preliminary estimate, based on incomplete data, September may have seen further growth of 0.7 per cent.
Since then, oil companies and railways have been laying off staff and provincial governments have been curtailing operations of bars, restaurants and places of entertainment. Canada’s economic rebound from the virus-induced March-April crash seemed to be running out of steam.
Motor vehicle sales in Canada increased in September, though sales for the year to date were still running 24 per cent below last year, according to the Desrosiers Automotive Consultant firm. The increase could reflect pent-up demand that was building up all summer when showrooms were almost inactive, but it could also show some recovery of consumer confidence.
In the U.S., according to last Thursday’s report from the commerce department’s bureau of economic analysis, that country’s gross domestic product, which had totalled US$21.6 trillion in the first quarter of the year, had recovered to US$21.2 trillion in the third quarter — about two per cent below the first-quarter level. That report delighted President Donald Trump, who was anxious to show the voters he had steered the economy out of the coronavirus crash.
The pandemic has been spreading faster and faster during September and October in Canada, in the U.S. and in Europe. Canada, which was reporting 200 to 300 new COVID-19 cases each day in August, is now reporting more than 2,000 a day. The U.S. is reporting around 80,000 a day.
In the U.K, which reported 23,000 new cases on Monday, a four-week lockdown starts today. Pubs, restaurants, non-essential shops and leisure and entertainment venues will be closed all across England. France has already started a similar one-month lockdown.
The World Health Organization, whose director-general is now in isolation following a possible personal exposure to the virus, on Wednesday reported 436,000 new cases around the world, bringing the total of cases since the pandemic started to 47.4 million with 1.2 million deaths.
In these conditions, spread of the disease is clearly accelerating in leading industrial countries, and governments are having little success in bringing it under control. Industrial activity is sure to be impaired during the late months of this year.
Unless someone can figure out how people in the northern hemisphere can stop passing the disease to their family members while they huddle inside through the winter, there is little reason to expect the economic rebound Canada enjoyed during the summer will soon resume.
Canada is now running with a 95 per cent economy – firing, so to speak, on 19 of its 20 cylinders. You could call that a glass five per cent empty or 95 per cent full, but either way we had better get used to it because we have done our economic rebound, and this is probably as much rebound as we get.