Krishen Rangasamy, Senior Economist at the National Bank of Canada, explains the potential impact of the introduction of cannabis consumption in the calculation of GDP.
Key Quotes:
“With the upcoming legalization of cannabis there’s, not surprisingly, growing interest in the impacts on Canada’s GDP. Some have even raised their Canadian growth forecasts in anticipation of a GDP bump in the fourth quarter of the year. True, Statistics Canada is scheduled on March 1st 2019 to include that commodity in its calculations of 2018Q4 GDP, and we could indeed get a bump if Q4 data on cannabis consumption is simply added to current consumption.”
“It’s also possible the government agency will address such discontinuity in the data by revising historic data (i.e. backcasting) to reflect estimates of prior cannabis consumption.”
“Backcasting, if properly done, should provide no material bump to Q4 GDP growth. As such, unless Statistics Canada makes it official that there will be no backcasting, we will be keeping our growth forecasts for Canada largely unchanged.”
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