Canada: Goods trade may have provided a small lift to economy in Q2 – NFB

The international trade report showed a recovery in June in Canada. Jocelyn Paquet, analyst at the National Bank of Canada point out the auto sector led the recovery in international goods exchange. They see a 40% annualized drop in GDP during Q2. 

Key Quotes:

“International trade in goods continued to recover in June as the economy gradually reopened. Total exchanges (exports + imports) rose the most on record (+19.5%) but nonetheless remained 16.1% below their pre-crisis level.”

“Turning to quarterly data, trade in goods could have contributed to Q2 growth but only because real exports (-54.0% annualized) did not shrink as fast as imports (-60.9%).”

“A steep contraction in import volumes in the machinery equipment (-61.4% annualized, the worst on record) and consumer goods (-20.5%) categories bodes ill for investment spending and household consumption in the second quarter of 2020. This is consistent with our call for a – 40.0% annualized drop in GDP in Q2.”