Canada: Uneven economic recovery likely to continue – NFB

Data released on Wednesday showed real GDP rose 3% in July (m/m), extending the recovery. Analysts at National Bank of Canada point out the recovery that is highly uneven between sectors. They see the recent surge in COVID-19 cases as the main risk to growth. 

Key Quotes:

“Canadian GDP registered yet another steep advance in July but the economic recovery remains highly uneven. On the one hand, some sectors have fully recovered from the COVID-19 shock, with output hovering at or near pre-pandemic peaks.”

“While the economic rebound is likely to have extended into August – Statistics Canada advance estimate suggests production expanded another 1.0% in the month – the steep gap between the best and worst performing industries is likely to endure as long as people keep avoiding social contacts (i.e. until an efficient vaccine becomes widely available). The real question remains whether the recovery can be sustained.”

“We believe it can given substantial fiscal support from the government, but the recent surge in COVID-19 cases in the country will likely cause a significant slowdown in growth in Q4.”