Data released on Tuesday showed an unexpected contraction in Canada’s GDP growth in the second quarter. According to analysts at National Bank of Canada, growth should accelerate to a reasonable rate in the third quarter thanks to commodity prices and the easing of health measures.
“The drop in Canadian GDP in the second quarter came as a surprise as GDP by economic activity, including preliminary estimate for June a month ago, showed 2.5% growth. This was pared back to a flat result after significant corrections in previous months. This is the worst result among the G7 countries, due to the health measures that have slowed the economic recovery.
“Canadian nominal GDP is now 5.1% higher than its pre-recession peak, making it the best result in the G7. The rise in commodity prices has contributed to this development, and terms of trade are at their highest level since 2008.”
“Despite disappointing preliminary GDP results in July, we continue to expect decent economic growth in the third quarter as commodity prices hold and healthy easing gives consumers the opportunity to spend after months of forced economy.”
“Growth could be hampered by supply issues in the auto sector that could continue into the end of the year.”
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