Canada’s Economy Recovered At Record Speeds of 40% in the Third Quarter

Despite the economic recovery GDP remains below pre-COVID levels

On Tuesday, Statistics Canada said the economy grew at a record annualized pace of 40.5% in the third quarter as businesses came out of the COVID-19 lockdowns.

The agency said the previous record for real gross domestic product growth was 13.2% in the first quarter of 1965.

Although this recovery is as historic, it fell short of expectations.

Financial data firm Refinitiv said the average economist estimate was the annualized growth rate of 47.6% for the quarter.

The rebound in July, August and September was a drastic change from the previous three months, which had seen a record drop.

Factors driving the economic rebound were the further rolling back of public health restrictions allowing businesses to reopen.

Statistics Canada also said there was a substantial increase in the housing market owing to low interest rates, as well as household spending on goods like cars.

Despite the overall increase, the national statistics office said real gross domestic product still remains shy of where it was before the pandemic.

CIBC senior economist Royce Mendes writes “The fourth quarter of 2020 is still beginning with some growth, though less than we had anticipated,”.

“Looking ahead, the economy faces a December with harsh restrictions that will likely see another contraction in economic activity.”

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