Canada’s gross domestic product contracted by 0.1% in July, continuing the trend from the second quarter, according to government data released Friday.
Losses in agriculture, coupled with continued global supply chain issues, wiped out gains in other sectors.
Losses in agriculture, coupled with supply chain issues, wiped out gains in other sectors.
This trend undermines the hope of a rapid expansion following vaccination efforts. GDP continued to decrease, though at a modest rate and despite the easing of restrictions across the country.
The major drags came from agriculture as well as wholesale and retail trade, which offset gains in most other sectors.
In agriculture, destabilizing droughts slashed wheat and canola crop yields across the Prairie Provinces by almost half. On the West Coast, record-breaking heat waves cooked aquaculture crops alive.
In addition, wholesale and retail trade continued to contract as the global supply chain issues, which had led to shortages of everything and high prices of imported goods, showed little resolution.
Unsurprisingly, accommodation and food services, together with transportation, showed the healthiest month-over-month growth. As vaccinations ramped up, COVID-19 restrictions eased, particularly those for interprovincial travel, allowing people to see their family and friends perhaps for the first time in 18 months. Canadians were excited to travel and gather.
Despite the slow and bumpy recovery, Canadian GDP growth is projected to turn positive in August as the economy picks up. Growth should approach its pre-pandemic level by the end of the year.
Although the Canadian economy is not out of the woods yet, the rebound will come this year. In the long run, with more frequent extreme weather events projected to occur, businesses need to formulate plans to adapt to a changing climate.
For more information on how the coronavirus pandemic is affecting midsize businesses, please visit the RSM Coronavirus Resource Center.