GDP drops record 11 per cent in April

OTTAWA — Canada’s growth in April plunged a record 11 per cent from March as businesses shut down to fight the coronavirus, Statistics Canada said in a flash estimate on Friday, and analysts said it was unclear how quickly the economy would recover.

Gross domestic product in March fell by 7.2 per cent from February, the most severe month-on-month plunge ever, although the decline was less than the nine per cent predicted by analysts. Statscan said the March and April decreases were likely the largest-ever consecutive monthly declines.

First-quarter annualized growth sank by 8.2 per cent - the most since the 8.7 per cent first-quarter decline in 2009, during the depths of the great recession. Analysts had expected a 10 per cent drop. Market watchers expect second-quarter data to be worse.

In recent weeks, most of Canada’s 10 provinces have taken measures to reopen slowly.

“The big question is how fast can the recovery be and there are wide uncertainty bands around how fast that can be, and that depends not just on economics but also on the spread of the virus,” said Nathan Janzen, senior economist at the Royal Bank of Canada.

First-quarter household spending dropped a record 2.3 per cent, as consumers stayed away from auto show rooms, clothing and footwear stores.

Andrew Kelvin, chief strategist at TD Securities, said the data “just doesn’t offer us any insight” as to how fast the economy might rebound.

The Canadian dollar weakened to C$1.3778 to the greenback, or 72.60 U.S. cents.

In response to the crisis, the Bank of Canada has slashed its key overnight interest rate to a record low and launched its first-ever, largescale bond-buying program.

“Whether the economy declines five per cent, six per cent, seven per cent or eight per cent this year, it’s still an extremely challenging backdrop that’s going to require a lot of support from both monetary and fiscal policy,” said Doug Porter, chief economist at the Bank of Montreal.