Canadian economy shrinks in second quarter, worst since 2009 financial crisis

In the first quarter of the year, Canada’s economy grew by 2.5%.

“All in all, the economic decline is in line with expectations”, Nomura bank economist Charles St-Arnaud told AFP.

The central bank estimated that the halt in oil production and evacuation of the Fort McMurray region cut 1.1 percentage points of growth off the second quarter.

“Exports of goods and services fell 4.5% in the second quarter”, StatsCan said. “But the downturn in exports came as a shock”.

BMO Chief Economist Douglas Porter also pointed out that this was hardly a surprise in his own published analysis.

Crude oil exports tumbled 9.6% while refined petroleum exports dropped almost 20%.

Exports of non-metallic minerals were also down 18 percent. The experts are saying no, citing the fact that in spite of the overall drop in GDP during the quarter, the month of June wasn’t too bad taken on its own.

And National Bank senior economist Krishen Rangasamy noted that the economic forces that led to softer USA demand for Canadian goods “are now dissipating”. The overproduction did little assure the International Energy Agency as they predict oil supplies will decrease in the third quarter.

Still, there were signs that a pickup was already underway.

With the Canadian dollar continuing to struggle, our balance of trade is not picking up as expected with exports of goods falling by 5.5% in the second quarter. Shipments of other goods to the US have faltered over the past year, business investment has dropped and consumer spending could be limited by record debt loads amassed through a housing boom. Business gross fixed capital formation fell 0.5 percent, the sixth straight decline, while consumer spending rose 2.2 percent.

The bank also says the first Canada Child Benefit payments will help growth in July and beyond.

At its peak, the Alberta blaze covered more than 500,000 hectares (1.2 million acres) of dense forest in northern Alberta.