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Analysts at CIBC, explained that forced shutdowns slammed on the brakes of Canada’s economy in April after it had already geared down materially in March. They point out the decline of 11.6% wasn’t all that different than the flash estimate Statistics Canada released alongside the March numbers, and wasn’t as dramatic as some indicators had suggested. 

Key Quotes: 

“As of May the economy was still operating almost 16% below the level it was in February. To put that into perspective, during the worst of the financial crisis, the Canadian economy was not operating more than 5% below it’s prior peak. 

“The drop in April GDP wasn’t as pronounced as feared. However, it did come with a slight downward revision to March and a somewhat uninspiring bounce in the flash estimate for May GDP. It’s possible that more of the pickup in activity resulting from easing restrictions and improved confidence will show up in the June data, but for now there’s at least some downside risk to our prior forecast for a roughly 40% SAAR drop in Q2 GDP.”

“The path back for the economy continues to look long and winding, particularly with cases of the virus picking up again in a number of countries across the world, of course most notably in Canada’s largest trading partner the US.”

“There appears to be some disappointment in markets, with fixed-income catching a bit of a bid. It’s likely due to the relatively modest bounce back in the May data since everything else was close to expectations.”