Shipping containers are seen at the Fairview Cove Container Terminal in Halifax on Friday, Aug. 25, 2017. THE CANADIAN PRESS/Andrew Vaughan

Shipping containers are seen at the Fairview Cove Container Terminal in Halifax on Friday, Aug. 25, 2017. THE CANADIAN PRESS/Andrew Vaughan

After worst year on record, Canada’s economy enters 2021 with double-digit growth

‘Lots of small businesses may have had to shut down… but a lot of other areas did manage to keep grinding through’

The Canadian economy sprinted to the finish line of 2020 with nearly double-digit growth in the fourth quarter, ending its worst year on record on a strong note that has continued into the start of 2021.

The economy grew at an annualized rate of 9.6 per cent over the last three months of 2020, Statistics Canada reported Tuesday, down from an annualized growth rate of 40.6 per cent in the third quarter when the country fully emerged from the near-shutdown last spring.

Despite the better-than-expected result for the quarter as a whole, growth slowed in December with a 0.1 per cent increase for the month, which followed a 0.8 per cent increase in November.

Looking to January, Statistics Canada said its early estimate was for growth in the economy of 0.5 per cent.

“Lots of small businesses — your local barbers, your local restaurant or stores — may have had to shut down through the restrictions, but a lot of other areas did manage to keep grinding through,” said BMO chief economist Douglas Porter.

“The sectors that did get closed down in the second wave, when they’re able to open up, we think the economy will have a big step up, and then we’ll have another, even bigger step up when the vast majority of the population is vaccinated.”

CIBC chief economist Avery Shenfeld wrote in a note that the early January figure should set aside fears of an outright downturn in the first quarter of 2021.

The COVID-19 pandemic was expected to trip up the economy after the virus’s spread shuttered businesses and led to millions out of work. The question was how bad would it be.

The answer the statistics agency provided Tuesday was that real gross domestic product shrank 5.4 per cent, the steepest annual decline since comparable data was first recorded in 1961.

The drop for the year was due to the shutdown of large swaths of the economy in March and April.

Economic activity slowly and steadily grew between May and November, though renewed lockdowns in some areas and a subdued holiday retail season in December saw the final month of the year buck taht trend.

Federal spending has also cushioned the blow. Statistics Canada reported on Monday that government aid has more than made up for losses in salaries and wages, particularly for low-income households.

Savings skyrocketed: RBC senior economist Nathan Janzen said households accumulated $212 billion in savings last year, about $184 billion above pre-shock trends, which could give a jolt to the economy as the year rolls on.

“Once containment measures ease, there is a lot of pent-up demand out there for spending on things like travel and hospitality services,” Janzen said.

The different impacts on sectors and the shift in online shopping, among other effects, make GDP an imperfect measure of what the economy went through.

Economist Armine Yalnizyan said an acceleration to digital sales in the retail industry could further disrupt the key economic indicator if technological shifts drive down prices and wages, ultimately affecting tax revenues.

“Even if you’re better off in terms of purchasing power, you may find your quality of life squeezed if we need to raise taxes to offer the same level of services,” said Yalnizyan, a fellow on the future of workers at the Atkinson Foundation.

“That’s why GDP is no longer as robust a measure of progress — because of digital.”

The Liberals have spoken more about employment levels as a key metric of recovery. It’s why experts say Tuesday’s GDP figures likely won’t change federal spending plans the Liberals are set to outline in the coming weeks as part of a budget the government has said would include up to $100 billion in stimulus measures over a three-year period.

“The government has no plan, but they talk about building back better,” said Conservative Leader Erin O’Toole. “And that really means they’re going to be leaving some people in some sectors that they don’t like out of the economic recovery.”

O’Toole didn’t offer specifics of his own, saying the Opposition Conservatives would have a detailed recovery plan before the next federal election.

The Liberals are reviewing a laundry list of budget ideas to help manage through the rest of the pandemic, and aid in a recovery.

Trevin Stratton, chief economist at the Canadian Chamber of Commerce, said support should be targeted in the medium-term to the hardest-hit businesses suffering under a debt load that is fast becoming unsustainable.

Goldy Hyder, president of the Business Council of Canada, wrote in an open letter to Finance Minister Chrystia Freeland that the government should invest in skills training, trade-enhancing infrastructure and research and development to raise productivity.

economy

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Amiri is currently working as a parliamentary intern. (Christian Diotte - Special to The News)
Maple Ridge woman earns scholarship to study law in Montreal

Somaya Amiri, 23, awarded McCall MacBain scholarship at McGill University

Bat Packs are the newest addition to the FVRL Playground, and have everything you need to learn more about bats, and track them in your neighbourhood. (FVRL image)
Bat Packs at Fraser Valley libraries come with echometer to track bats

Packs are the newest part of the FVRL Playground inventory

Online guide expected to make applying for building permits easier. (The News files)
City of Maple Ridge launches new building permit application tool

Users can print or save their results for easy access

Dogs big and small on the patio at Witchcraft Beer Market and Bistro. (City of Maple Ridge/Youtube)
VIDEO: Maple Ridge businesses embrace new dog friendly pilot project

Pets can come onto a patio at a restaurant or enter participating retail spaces

A photo submitted to municipal staff on April 6 showing a beaver dam southwest of Chester Street. The drainage issues on the south side of the highway are the responsibility of CP Rail, as they own the property. Photo courtesy of the District of Mission.
Delegation of Silverdale farmers say land continually floods along Lougheed Highway

Beaver dams, siltation, fallen trees, bad ditching is sinking crops next to recently widened highway

Surrey RCMP are seeking the public's help to locate three puppies stolen from a South Surrey home on April 10. (Surrey RCMP photos)
UPDATE: 1 of 3 puppies stolen from South Surrey returned to owner

American Bulldog puppy recovered after being sold at Mission car show

(Government of Canada)
Liberal MP caught stark naked during House of Commons video conference

William Amos, in Quebec, appeared on the screens of his fellow members of Parliament completely naked

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

Provincial health officer Dr. Bonnie Henry updates B.C.’s COVID-19 situation at the B.C. legislature, Feb. 1, 2020. (B.C. government)
B.C.’s COVID-19 case count jumps to 1,168 Wednesday, nearly 400 in hospital

Now 120 coronavirus patients in intensive care, six more deaths

Moss covered branches are seen in the Avatar Old Growth Forest near Port Renfrew on Vancouver Island, B.C. Thursday, Sept. 29, 2011. THE CANADIAN PRESS/Jonathan Hayward
B.C. blockades aimed at protecting old-growth forests reveal First Nation split

Two Pacheedaht chiefs say they’re ‘concerned about the increasing polarization over forestry activities’ in the territory

Everett Cummings in a tribute video posted to dignitymemorial.com.
Mechanic’s death at Fraser Surrey Docks leads to $200K fine for company, union says

Photos of rally outside Surrey court posted on ILWU’s ‘Kill A Worker Go To Jail’ Facebook page

Richmond RCMP Chief Superintendent Will Ng said, in March, the force received a stand-out number of seven reports of incidents that appeared to have “racial undertones.” (Phil McLachlan/Capital News)
‘Racially motivated’ incidents on the rise in B.C’s 4th largest city: police

Three incidents in Richmond are currently being invested as hate crimes, says RCMP Chief Superintendent Will Ng

Commercial trucks head south towards the Pacific Highway border crossing Wednesday (April 14, 2021). The union representing Canadian border officers wants its members to be included on the frontline priority list for the COVID-19 vaccine. (Aaron Hinks photo)
CBSA officers’ union calls for vaccine priority in B.C.

Border officers at ports including, YVR and land crossings should ‘not be left behind’

Most Read