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

Marchers supporting Indian farmers rallied in Surrey last month, from Bear Creek Park to Holland Park along King George Boulevard. (File photo: Tom Zillich)
Surrey MP says mayor’s motion to support Indian farmers is his to make

“He has his own sovereignty, right,” Sukh Dhaliwal says

Lord Tweedsmuir’s Tremmel States-Jones jumps a player and the goal line to score a touchdown against the Kelowna Owls in 2019. The face of high school football, along with a majority of other high school sports, could significantly change if a new governance proposal is passed at the B.C. School Sports AGM May 1. (Photo: Malin Jordan)
Power struggle: New governance model proposed for B.C. high school sports

Most commissions against new model; BCSS and its board in favour

Researchers say residents should leave sleeping bats alone while they exit hibernation. (Cathy Koot photo)
Spring ‘signal’ brings White Rock, Surrey bats out of hibernation

Community Bat Programs of BC says it’s best to leave sleeping bats alone

(Photo: Creative Outlet)
YOUR MONEY: Tax tips for a complicated tax season involving CERB and more

With April 30 tax deadline, ‘it is important to understand the tax implications (benefits) will have’

The Delta Police Department’s Equity, Diversity and Inclusion Unit: (from left) Const. Joel Thirsk, analyst Jody Johnson and Staff Sgt. Sukh Sidhu. (Delta Police Department photo)
Delta police respond to rising number of hate crimes

Police have received 15 reports so far in 2021, compared to 12 in all of 2020

A woman wears a protective face covering to help prevent the spread of COVID-19 as she walks past the emergency entrance of Vancouver General Hospital in Vancouver, B.C., Friday, April 9, 2021. COVID-19 cases have been on a steady increase in the province of British Columbia over the past week. THE CANADIAN PRESS/Jonathan Hayward
Top doctor warns B.C.’s daily cases could reach 3,000 as COVID hospitalizations surge

There are more than 400 people in hospital, with 125 of them in ICU

The father of Aaliyah Rosa planted a tree and laid a plaque in her memory in 2018. (Langley Advance Times files)
Final witness will extend Langley child murder trial into May or June

Lengthy trial began last autumn with COVID and other factors forcing it to take longer than expected

The corner of 96th Avenue and Glover Road in Fort Langley now has traffic signals, and new “touchless” signal activation buttons. (Matthew Claxton/Langley Advance Times)
Busy Fort Langley intersection gets ‘touchless’ crosswalk signals

The new traffic light started operation in April

A crossing guard stops traffic as students wearing face masks to curb the spread of COVID-19 arrive at Ecole Woodward Hill Elementary School, in Surrey, B.C., on Tuesday, February 23, 2021. A number of schools in the Fraser Health region, including Woodward Hill, have reported cases of the B.1.7.7 COVID-19 variant first detected in the U.K. THE CANADIAN PRESS/Darryl Dyck
COVID-infected students in Lower Mainland schools transmitting to 1 to 2 others: data

Eight to 13 per cent of COVID cases among students in the Lower Mainland were acquired in schools, B.C. says

Dr. Bonnie Henry – in a B.C. health order that went into effect April 12 – granted WorkSafe inspectors the power to enforce workplace closures with COVID-19 spread. THE CANADIAN PRESS/Jonathan Hayward
24 workplace closures being enforced in Fraser Health under new COVID-19 order

WorkSafe inspectors the power to enforce closures if COVID-19 has spread to 3 or more employees

Maple Ridge Fire and Rescue were conducting training operations at Gold Creek Falls when a firefighter broke their leg. (Eileen Robinson photo - Special to The News)
Firefighter suffers broken leg during swift water rescue practice in Golden Ears park

A training exercise at Maple Ridge waterfall on Wedesday results in mishap

Norm Scott, president of Royal Canadian Legion Branch # 91, is disappointed the Legion does not qualify for COVID financial assistance from the provincial government. (Black Press Media file photo)
B.C.’s pandemic aid package passing Legion branches by

Federal non-profit status stymies provincial assistance eligibility

Latest modelling by public health shows cases generated by COVID-19 infections into places where it can spread quickly. (B.C. Centre for Disease Control)
Industrial sites, pubs, restaurants driving COVID-19 spread in B.C.

Infection risk higher in offices, retail, warehouses, farms

Most Read