Gross Domestic Product (GDP)
Gross Domestic Product (GDP) is the total monetary value of goods and services produced within an economy during a specific period of time. It is used as a measure of the size and growth of an economy.
- After two consecutive quarterly declines, Canadian real Gross Domestic Product (GDP) rebounded in Q3 2020 when it grew by 8.9 per cent.
- Annualized, Canadian real GDP increased by 40.8 per cent in Q3 2020, the strongest quarterly growth on record.
- Growth was pervasive, occurring across both the goods producing and service sectors.
- Canadian GDP continued to grow in October and November 2020 and is forecast to grow in December.
- For 2020, Canadian GDP is expected to decline before rebounding in 2021.
Quarterly Gross Domestic Product
In Q3 2020, Canadian real GDP rebounded from a steep decline in Q2 2020 to register a growth of 8.9 per cent.
This represented an annualized growth of 40.8 per cent, the steepest growth recorded since quarterly data was first recorded in 1961.
There was growth in GDP of both the goods producing (8.8 per cent) and service (9.3 per cent) sectors.
The sectors which were severely impacted by the COVID-19 induced recession in the first half of 2020, led the rebound in GDP in Q3 2020:
- The strongest growth was registered in the service sub-sector accommodation and food services, which bounced back from a 50.0 per cent decline in Q2 2020 to register a 54.3 per cent growth; and
- The rebound in the goods producing sector was led by manufacturing, up 18.7 per cent in Q3 2020. Canadian manufacturing GDP fell by 18.9 per cent in the previous quarter.
Although there was strong GDP growth in Q3 2020, the steep decline registered in the preceding quarter kept Q3 2020 GDP below the level recorded in Q3 2019.
Canadian Real Gross Domestic Product Forecast
Monthly GDP continued to increase in October (0.4 per cent) and November (0.7 per cent) 2020.
Based on the nowcast by Statistics Canada, Canadian monthly GDP is expected to continue to grow in December 2020 (by approximately 0.3 per cent) to extend monthly Canadian GDP growth to eight consecutive months.
Current private sector GDP forecasts suggests that real Canadian GDP is likely to show the following annual changes:
- 2020: -3.9 per cent; and
- 2021: 5.4 per cent
Despite the rebound expected in GDP in 2021, the Canadian economy is not expected to return to its pre-pandemic level until 2022 at the earliest.