Canada’s economy appears to have suffered its worst year on record as the national statistics agency’s preliminary estimate showed a contraction of 5.1 per cent in 2020.
The flash estimate, which has yet to be finalized, is worse than 1982 when the economy contracted by 3.2 per cent, which was the worst over the course of six decades of comparable data.
Not even at the height of the global financial crisis just over a decade ago were things as bad as they were last year when the real gross domestic product fell 2.9 per cent in 2009.
Statistics Canada said it expects to finalize the numbers in the coming weeks.
The drop is largely due to steep declines in March and April as large swaths of the economy were shut down during the first wave of the COVID-19 pandemic.
Since then, economic activity has slowly and steadily grown.
Statistics Canada said Friday the economy grew 0.7 per cent in November, marking the seventh straight month of gains after the steep drops in the spring. The growth followed a 0.4 per cent increase in October.
It also came with the backdrop of positive news about vaccines and a presidential election south of the border where Joe Biden defeated Donald Trump.
Stock market activity increased as market sentiments improved, as the finance and insurance sector grew by 1.3 per cent in November.
Mining saw an increase in demand for things like potash and non-metallic minerals. Likewise, the oil and gas sector saw gains as facilities in Alberta restarted production.
The retail sector was up by 1.1 per cent in November, including growth of 6.1 per cent in the food and beverage subsector that Statistics Canada attributes to higher activity in grocery stores, along with a boost in business for beer, wine and liquor stores.
The agency also said its preliminary estimate for December shows growth of 0.3 per cent, even as much of the country headed into heavy restrictions to slow the spread of COVID-19 and jobs were lost.
The preliminary estimate for the fourth quarter shows an annualized growth rate of 7.8 per cent.
CIBC senior economist Royce Mendes wrote that the figures suggest the economy healed more than expected in the final months of 2020.
“That said, the economy will only be able to outrun the second wave of the virus for so long,” Mendes says in a note.
“With unemployment rising in December and public health officials being forced to tighten restrictions even further in January, the situation likely became more dire in the new year.”