OTTAWA — Statistics Canada will report this morning how the national economy fared in the second quarter of 2020, which is widely expected to show the steepest drop on record due to the COVID-19 pandemic.
The country’s central bank has forecast that April, May and June would be the worst three-month stretch for the economy this year since those months span the height of prevention-related shutdowns.
Financial data firm Refinitiv says the average economist estimate is for a 39.6-per-cent plunge compared to the same period in 2019.
Much of that drop will be driven by shutdowns beginning in April that have since been rolled back.
That improvement is clearer in the monthly data. Last month, Statistics Canada released a preliminary estimate that economic output rose five percent in June, following an increase in May.
Average economist expectations are for an increase in output of 5.6 percent in June, according to Refinitiv.
If June’s number are as positive as economists believe, July’s could be as well and the statistics office is expected to provide a preliminary estimate for last month’s output in its report Friday.
The Bank of Canada has warned that any initial bump will turn into a long climb toward pre-pandemic levels.
On Thursday, governor Tiff Macklem told an international gathering of central bankers that not all small and medium-sized businesses are going to be able to reopen even as restrictions to contain COVID-19 are rolled back.
That will be especially the case in sectors like restaurants and hospitality, where people need to be close together.
“We are seeing now some very impressive rebound numbers as the economy reopens,” Macklem said on a virtual panel hosted by the Federal Reserve Bank of Kansas City.
“That’s a really good thing, but not all parts of the economy are going to be able to reopen for some time, and so we expect that after this first phase, it’s going to be a pretty long, bumpy phase.”
Also on Thursday, credit rating agency Fitch Ratings said the pandemic has taken “a permanent toll” on economic growth potential in Canada, and dropped growth expectations to around one percent. The agency said government spending will remain high while economic activity takes years to recover, and warned it may have to further downgrade the country’s credit rating if deficits and debts weren’t brought under control.