The Canadian economy contracted 1.6 per cent in the second quarter, the largest decline since the second quarter of 2009. The impact of Alberta wildfires on oil production and other other industries was the primary cause of negative growth. Excluding the large decline in crude petroleum output, real GDP increased 1.2 per cent.
Very strong consumption growth in the second quarter and a 0.6 per cent rebound in growth in June means that the hand-off to third quarter growth should be very strong. We expect Canadian economic growth will rebound sharply in the third and fourth quarter as oil production normalizes and the federal government's uptick in expenditures and tax credits impacts the economy. The Canadian economy is forecast to expand at an average of 2.5 per cent in the second half of 2016 and into 2017.
Copyright British Columbia Real Estate Association. Reprinted with permission.