Canadian Real GDP Declines in Q2 2021, Ending Three Consecutive Quarters of Growth

Statistics Canada (StatsCan) reported on Tuesday (8-31-21) that a substantial decline in home resale activity and exports pushed the real gross domestic product (GDP) in Canada down -0.3% in Q2 2021. This marks the end of three consecutive quarterly increases that followed the sharp decline of -11.3% caused by pandemic-related business shutdowns and travel restriction in Q2 of 2020.

Increases in investment in business inventories, government final consumption expenditures, business investment in machinery and equipment, and investment in new home construction and renovation were unable to offset the declines in exports (-4.0%) and home ownership transfer costs (-17.7%), which include all costs associated with the transfer of a residential asset from one owner to another. Imports were flat in Q2 as well.

Real gross national income rose 1.5%, reflecting gains from higher prices of exported crude oil and crude bitumen. Final domestic demand edged up 0.2%, following the 1.6% rise in Q1 2021.

The GDP implicit price index, which reflects the overall price of domestically produced goods and services, rose 2.2% in Q2, driven by prices of construction materials and energy. This growth followed a 3.0% increase in the Q1. Consequently, nominal GDP increased 1.9%.