Statistics Canada revealed that the Canadian economy contracted in its worst performance in seven years.
The federal agency said real gross domestic product fell at an annualized rate of 1.6 per cent in the three-month period, due in large part to the wildfires that destroyed parts of Fort McMurray, Alberta.
Economists had expected a drop of 1.5 per cent in the second quarter, according to Thomson Reuters.
The drop in GDP came as exports of goods and services fell 4.5 per cent in the quarter following a 1.9 per cent increase in the first three months of the year. Exports of goods were down 5.5 per cent, while exports of services grew 0.6 per cent.
Energy product exports fell 7.5 per cent, with crude and bitumen exports declining 9.6 per cent and refined petroleum products down a whopping 19.6 per cent. Motor vehicles and parts also dropped 5.8 per cent due to lower exports of passenger cars and light trucks.
Exports of aircraft and other transportation equipment and parts were up 5.6 per cent.
Statistics Canada said real GDP rose 0.6 per cent that month, boosted in part to non-conventional oil extraction as production in the Alberta oilsands region started to resume. Mining, quarrying and oil and gas extraction climbed 3.6 per cent in June, boosted by 12 per cent gain in non-conventional oil extraction.
The second-quarter result reported Wednesday was worse than forecast by the Bank of Canada in its July monetary policy report. The central bank had predicted that the economy would contract at an annual rate of 1.0 per cent during the second quarter due to the damage caused by the wildfires.
But the Bank of Canada has also predicted that growth will pick up in the third quarter to an annual pace of 3.5 per cent as oil production ramps up and rebuilding efforts begin in Fort McMurray. The federal government’s new Canada child benefit will increase consumer spending and the start of infrastructure construction across the country is also expected to help push the economy in the right direction. – CINEWS