OTTAWA: Canada’s economy likely contracted in April, the first decline in a year, due to widespread lockdowns amid a third wave of coronavirus infections, slowing the country’s march toward recovery, data showed on Tuesday.
In a preliminary estimate, Statistics Canada said the economy contracted 0.8% in April. By contrast, real GDP had grown 11 months in a row through March, when it grew 1.1%.
Economists said the April decline was largely expected and is unlikely to change the Bank of Canada’s outlook for interest rate hikes.
“They were talking about the output gap and inflation getting back to target by late 2022. That’s still a long way from here,” said Doug Porter, chief economist at BMO Capital Markets.
The Bank of Canada last month signalled rates could begin to rise in 2022, noting the economy had rebounded more quickly than it had expected.
The Canadian economy grew 5.6% on an annualized basis in the first quarter, as restrictions were eased between the second and third waves of Covid-19, and buoyed by strong housing investment and more mortgage debt. The gain missed analyst expectations of 6.7%.
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