The Canadian economy contracted 0.6 per cent in May, the largest decline in real GDP since March 2009. This decline was the result of a 22 per cent drop in output of the non-conventional oil extraction industry due to the Fort McMurray wildfire. Excluding that decline, real GDP was down 0.1 per cent.
Given the large decline in May, second quarter real GDP growth could contract by more than -1 per cent. However, since the decline is almost entirely due to the Fort McMurray wildfires, growth should post a strong rebound as oil production comes back on-line and the reconstruction effort begins. That rebound will be further supported by a boost of fiscal stimulus planned for the second half of the year pushing growth above 2 per cent for the remainder of 2016.
Copyright British Columbia Real Estate Association. Reprinted with permission.