The total value of all the goods and services produced in Canada’s economy shrank for the first time in a year in April, a reminder of the unprecedented impact of COVID-19 even as provinces tentatively reopen.
Statistics Canada reported Wednesday that Canada’s gross domestic product (GDP) shrank by 0.3 per cent as a majority of industries had less output during the month than they did in March.
All in all, April’s data shows that Canada’s economy is still not as big as it was in February 2020, before the onset of the pandemic.
Then, the economy was worth just over $2 trillion. According to the latest numbers, it’s now at $1.978 trillion, after bottoming out in April at just over $1.6 trillion.
Goods-producing industries expanded by 0.5 per cent, but that was more than offset by a contraction of 0.6 per cent in the service sector, which is a much larger part of Canada’s economy.
Retail, manufacturing and the real estate industry led the declines. On the other side of the ledger, construction, oil and gas, and the public sector grew.
Economist Sri Thanabalasingam with TD Bank noted that so-called “high touch” industries like retail, food, accommodation, and arts and entertainment were hardest hit.
“The economy’s march towards a full recovery took a step back in April as the third wave and tighter restrictions weakened activity for the month,” he said.
Preliminary numbers for May suggest that the economy shrank again last month, by another 0.3 per cent. That would be the first two-month decline since the dark days of March and April of last year, but Thanabalasingam says he’s confident the economy has turned the corner.
“April and May were likely temporary setbacks to the recovery. Better days are already here. Reopening across the country, falling cases and hospitalizations, and an extraordinary vaccine rollout should lead to a rapid bounce back in economic activity,” he said.
“Although the delta variant could create some challenges, Canada’s inoculation pace could keep such risks at bay. The clouds are parting, the worst of the pandemic could finally be behind us.”