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Summary
- Real gross domestic product (GDP) contracted by about 5.4 per cent in Canada last year, noting the sharpest yearly decline since GDP figures were first recorded.
- The real GDP, however, grew by 2.3 per cent in 2020’s last quarter.
- Canada’s nominal GDP fell 4.6 per cent YoY in 2020.
Real gross domestic product (GDP) contracted by about 5.4 per cent in Canada last year, which, Statistics Canada noted, was the sharpest yearly decline since GDP figures were first recorded.
The country’s real GDP, however, grew by 2.3 per cent in 2020’s fourth quarter after record fluctuations in the preceding two quarters. In December 2020, it climbed by about 0.1 per cent.
Canada’s final domestic demand, which is the total of private and public sectors’ final consumption, investment and stock building expenses in real terms, shot up by about 0.9 per cent in Q4 2020. The number, however, dwindled by 4.5 per cent for 2020 overall.
Canada’s Q4 2020 Real GDP Figures – Key Insights
Canada’s real GDP growth in the latest quarter was boosted by changes in business inventories, higher government final consumption expenses, housing investment as well as that made by businesses in machinery and equipment segments.
Housing investment surged by 4.3 per cent in Q4 2020, following a rise of about 30.7 per cent in the previous quarter.
©Kalkine Group 2021
While business investment rose by 1.6 per cent in engineering structures in Q4 2020, it dwindled by 10.9 per cent in non-residential buildings. A primary factor behind this was weak demand for office spaces and shopping centres amid the pandemic. Investment in machinery and equipment segments climbed by 7 per cent, coinciding increased imports.
In 2020 overall, however, business investment in this segment fell by 16.4 per cent.
Canada’s household spending sank by a marginal 0.1 per cent in Q4 2020. This came after a 13.1 per cent jump in Q3 2020.
For 2020, household spending was down 6.1 per cent year-over-year.
Growth in export volumes edged down to 1.2 per cent in Q4 2020, as Canada’s major trading partners experienced economic slowdowns and resulted in reduced international demand.
Canada’s GDP implicit price index, which tracks the overall price of goods and services produced in the country, climbed by 1.1 per cent in 2020’s last quarter. As a result, the nominal GDP growth in Q4 2020, at 3.4 per cent, was larger than that of the real GDP.
©Kalkine Group 2021
Nevertheless, Canada’s nominal GDP fell 4.6 per cent YoY in 2020.
Canada’s December 2020 Real GDP Figures – Key Insights
December’s GDP increase was the eighth monthly climb in a row, which continued to offset Canada’s sharpest falls on record in economic activity in March and April. However, total economic activity remained below February's pre-pandemic level by about three per cent.
While goods-producing industries saw its GDP leap by about 0.6 per cent in the last month of 2020, services-producing industries slowed down by 0.1 per cent.
StanCan noted that advanced information hint at a real GDP rise of about 0.5 per cent in January 2021. The final, revised figures for the first month of the year will be released on March 31.
