Image for post
Image for post
Photo credit Matthias Mullie, https://unsplash.com/photos/VAxCHgJvZ0g

V for Recovery

Canada’s newest GDP data reveals a promising trend

Ryan McLaughlin
Aug 31 · 3 min read

On Friday, Statistics Canada released new sector-level Gross Domestic Product (GDP) for June 2020. After much speculation, this data offers an idea of how Canada’s recovery from the COVID-19 economic crisis is likely to unfold.

In short, the resumption of economic activity has been faster than many analysts expected. This relief comes after months of record-breaking plunges in economic indicators. Figure 1 below shows that aggregate Canadian GDP in June had nearly recovered to the level of March 2020, just following the onset of the pandemic, and was about 9% below the February peak.

Canadian GDP from January 2010 to June 2020.
Canadian GDP from January 2010 to June 2020.
Figure 1: Canadian GDP, Adjusted for Inflation and Seasonality

Some sectors continue to struggle, particularly Food & Drinks. Figure 2 reveals that the sector remains about 40% below its February level.

Image for post
Image for post
Figure 2: Food and Drinks Sector GDP, Canada

Construction industry GDP has largely bounced back, as shown in Figure 3.

Image for post
Image for post
Figure 3: Construction Industry GDP, Canada

Figure 4 shows that Oil & Gas industry GDP in June stopped declining for the first time since the crisis began.

Image for post
Image for post
Figure 4: Oil & Gas GDP, Canada

Most interestingly, Figure 5 showcases the remarkable anti-fragility of the Information and Communications Tech (ICT) sector GDP with respect to this crisis. As documented in ICTC’s just-released Revised Labour Market Outlook for 2022, ICT and the ‘Digital Economy’ have been nearly unscathed by the pandemic.

Image for post
Image for post
Figure 5: ICT GDP, Canada

Another sector that has proven relatively resilient is the recently liberalized Cannabis sector, which has grown in every month since the pandemic began, with economic activity reaching the manic exuberance of late last year (see Figure 6).

Image for post
Image for post
Figure 6: Cannabis Sector GDP, Canada. Reflects both legal and illegal activity, latter estimated by Statistics Canada.

The steep recovery in GDP in June does not, of course, preclude additional lock-downs, and reversals in economic fortune in the fall. Many viruses, including Coronaviruses like the “common cold” are seasonal. Indeed, the high probability of a “second wave” of infections in the fall appears to be the consensus view, for whatever that is worth.

On the other hand, there are reasons for continued optimism. Progress on vaccines has been remarkable, considering that a vaccine typically takes a decade to develop. Across the developed world, COVID-19 mortality rates have fallen sharply and somewhat mysteriously across all age brackets. This might be due to the accumulation of incremental knowledge on treatment, including avoiding intubation with a ventilator (early enthusiasm for ventilators may have been misplaced).

Coronavirus tests are falling in price and delivering faster responses, and researchers have come to better understand transmission mechanisms. Early in the pandemic, emphasis was placed on transmission via surface contact while masks were downplayed, the opposite of current wisdom. Notwithstanding sensationalist and moralizing journalist coverage of irresponsible “beach-goers,” it is understood that the virus does not transmit well outdoors or during brief encounters.

Statistics Canada’s June report gives Canadians the chance to breathe a sigh of relief. The crisis is far from over, but there are reasons for cautious optimism that the worst fears of a second “Great Depression” are less likely. Let us hope that progress continues to be made on the scientific basis of controlling the virus, including vaccines, treatments, and transmission, while Canadians return to work in the coming months.

A future-focused, non-profit think tank for the digital economy.

Ryan McLaughlin

Written by

Digital Think Tank by ICTC
Ryan McLaughlin

Written by

Senior Economist & Research Analyst at the Information and Communications Technology Council

Digital Think Tank by ICTC

ICTC’s Digital Think Tank strives to shape a vibrant and equitable digital future. By providing evidence-based foresight, we help decision-makers navigate the intersection of public policy, societal challenges, and digital trends to cultivate shared prosperity.

Medium is an open platform where 170 million readers come to find insightful and dynamic thinking. Here, expert and undiscovered voices alike dive into the heart of any topic and bring new ideas to the surface. Learn more

Follow the writers, publications, and topics that matter to you, and you’ll see them on your homepage and in your inbox. Explore

If you have a story to tell, knowledge to share, or a perspective to offer — welcome home. It’s easy and free to post your thinking on any topic. Write on Medium

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store