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

Restaurant patrons enjoy the weather on a patio in Vancouver, B.C., Monday, April 5, 2021. The province has suspended indoor dining at restaurants and pubs until at least April 19 in B.C. due to a spike in COVID-19 numbers. THE CANADIAN PRESS/Jonathan Hayward
B.C. sets new COVID-19 daily record with 1,293 cases Thursday

New order allows workplace closures when infections found

The new 3,500 hectare conservancy in Tahltan territory is located next to Mount Edziza Provincial Park. (BC Parks Photo)
New conservancy protects sacred Tahltan land near Mount Edziza Provincial Park

Project is a collaboration between Skeena Resources, conservation groups and the TCG

Mabel Todd, 83, of the Nak’azdli First Nation, leads a group of family members and advocates of missing and murdered Indigenous women and girls as they walk along the so-called Highway of Tears in Moricetown, B.C. THE CANADIAN PRESS/Darryl Dyck
Province, feds fund full cell service along ‘Highway of Tears’ following years of advocacy

A ‘critical milestone in helping prevent future tragedies’ after at least 10 Indigenous women murdered, missing along the route

Erin O’Toole, Conservative Party of Canada leader, answered questions during a Terrace District Chamber of Commerce event on April 6, 2021. (Screenshot/Terrace District Chamber of Commerce Facebook)
Erin O’Toole discusses Terrace issues during virtual event

Federal Conservative leader answered questions during a Terrace & District Chamber of Commerce event

Easter is on Sunday, April 4, 2021. How much do you know about Easter history and traditions? (Pixabay.com)
QUIZ: How much do you know about Easter?

Put your knowledge to the test with this short quiz about Easter and its traditions

B.C. Health Minister Adrian Dix and Premier John Horgan describe vaccine rollout at the legislature, March 29, 2021. (B.C. government)
1,262 more COVID-19 infections in B.C. Friday, 9,574 active cases

Province’s mass vaccination reaches one million people

B.C. Premier John Horgan responds to questions during a postelection news conference in Vancouver, on Sunday, October 25, 2020. British Columbia’s opposition Liberals and Greens acknowledge the COVID-19 pandemic has presented huge challenges for Horgan’s government, but they say Monday’s throne speech must outline a coherent plan for the province’s economic, health, social and environmental future. THE CANADIAN PRESS/Darryl Dyck
Horgan’s NDP to bring in throne speech in B.C., Opposition wants coherent plan

Farnworth said the budget will include details of government investment in communities and infrastructure

FILE - An arena worker removes the net from the ice after the Vancouver Canucks and Calgary Flames NHL hockey game was postponed due to a positive COVID-19 test result, in Vancouver, British Columbia, in this Wednesday, March 31, 2021, file photo. As vaccinations ramp up past a pace of 3 million a day in the U.S, the NHL is in a tougher spot than the other three major North American professional sports leagues because seven of 31 teams are based on Canada. (Darryl Dyck/The Canadian Press via AP, File)
Vancouver Canucks scheduled to practice Sunday, resume games April 16 after COVID outbreak

Canucks outbreak delayed the team’s season by eight games

Two-year-old Ivy McLeod, seen here on April 9, 2021 with four-year-old sister Elena and mom Vanessa, was born with limb differences. The family, including husband/dad Sean McLeod, is looking for a family puppy that also has a limb difference. (Jenna Hauck/ Chilliwack Progress)
B.C. family looking for puppy with limb difference, just like 2-year-old Ivy

Ivy McLeod born as bilateral amputee, now her family wants to find ‘companion’ puppy for her

A vehicle that was driven through the wall of a parkade at Uptown Shopping Centre and into the nearby Walmart on April 9 was removed through another hole in the wall later that night. (Photo via Saanich Police Department and Ayush Kakkar)
Vehicle launched into B.C. Walmart removed following rescue of trapped workers

Crews cut new hole in parkade wall to remove vehicle safely

Four members with Divers for Cleaner Lakes and Oceans were out at Cultus Lake on March 28 and 29 hauling trash out of the waters. (Henry Wang)
PHOTOS: Out-of-town divers remove 100s of pounds of trash from Cultus Lake

Members of Divers for Cleaner Lakes and Oceans hauled out 470 pounds of trash over two days

As of Saturday, April 10, people born in 1961 are the latest to be eligible for a COVID-19 vaccine. (Black Press files)
B.C. residents age 60+ can now register to get their COVID-19 vaccine

Vaccine registration is now open to people born in 1961 or earlier

A new saline gargle test, made in B.C., will soon be replacing COVID-19 nasal swab tests for kids. (PHSA screenshot)
Take-home COVID-19 tests available for some B.C. students who fall ill at school

BC Children’s Hospital plans to provide 1,200 kits to Vancouver district schools this April

Most Read