In this week’s EconMinute, we’re talking about GDP and Canada’s economic recovery.
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Today, we look again at one of the most commonly used measures of economic recovery: GDP. A couple months ago, we reported that the K-shaped recovery across industries remains largely intact. As most industries see moderate growth, a few remain far behind.
So, how are these industries faring more recently?
Industries dependent on in-person services and the travel of people and goods remained far behind as of the latest data (May). However, this captures a time when many restrictions were largely in place. For instance, restaurants in Alberta were open only for carryout or delivery for much of this time. In Ontario, there was a stay-at-home order in place.
As of May, here is what we see:
- Sales in accommodation and food services—which were 65% below pre-pandemic levels as of the lowest point in the pandemic—were down 38%.
- Similarly, transportation and warehousing puttered along well below normal levels, though a large improvement from its worst: while it was 32% below pre-pandemic levels as of its lowest point, it was 20% below normal levels in May.
- Arts, entertainment, and recreation, which includes things like theatres and fitness centres, showed the weakest recovery as of May—not surprising considering some of these businesses were completely unable to operate amidst restrictions. Sitting at a mere half of its pre-pandemic levels, the industry was only in a slightly better position than its lowest point in May of last year.
Since then, restrictions have eased across all provinces, restaurants have largely reopened to in-person dining, and consumers have started to get out and even travel. This will all be captured in the next update for June and early estimates are encouraging: Statistics Canada projects a 0.7% increase in real GDP, driven by the recovery of hard-hit sectors despite some weakness in others.
What happens in the coming months is less clear. As cases increase again, questions remain as to the impact on these industries, whether through the possibility of renewed restrictions or more hesitancy among consumers. What is clear as of now is individuals are keen to get out of the house to eat, shop, and travel again, and hard-hit industries seem poised to bounce back.