Economists cut their estimates for Canada’s April GDP numbers on Friday, after a plunge in retail sales capped out a grim week of data reflecting the deep impact of the COVID-19 pandemic on the Canadian economy.
Canada posted record declines in wholesale trade, factory sales and retail sales this week as lockdowns designed to slow the spread of the coronavirus hammered the economy, data showed.
That means April GDP could fall up to 15%, compared with Statistics Canada’s flash estimate of 11% drop, said Doug Porter, chief economist at BMO Capital Markets.
April GDP data will be released on June 30.
“I think (the economy is) in a deeper hole than StatsCan first estimated a few weeks ago when they gave us a preliminary estimate of the April GDP decline,” Porter said.
CIBC Economics now expects April GDP to fall between 13%-14%, but senior economist Royce Mendes said the May flash estimate of 19.1% gain for retail sales suggest a more vigorous rebound. Manufacturing and wholesale trade data could show signs of improvement in May, according to Statistics Canada.
“That leaves the quarter largely around the same range,” said Mendes.
Yet, Mendes expects all major categories of the GDP to be well below pre-coronavirus levels at the end of the summer, even as stores and businesses reopen and the GDP starts to rise.
“We’re growing, but we’re growing from a very low base,” he said.
The Bank of Canada Governor Tiff Macklem said this week April appears to have been the trough in the downturn, which has left Canada in a “deep hole” and “its going to be a long way out of this hole.”
Whether a full recovery takes months or years is anyone’s guess, say economists.
“I think we are basically in the hands of the virus on that front,” said BMO’s Porter.