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Canada GDP Q3 2021

Canada: GDP rebounds robustly in the third quarter

GDP increased 5.4% in seasonally-adjusted annualized terms (SAAR) in the third quarter of 2021, contrasting the 3.2% contraction logged in the second quarter. On an annual basis, GDP rose 4.0% in Q3, decelerating from the previous quarter’s 11.8% increase.

The rebound in SAAR terms was predominately driven by a surge in private consumption, which rose 17.9% in Q3 after falling 0.5% in the second quarter. Less positively, government consumption decreased 0.7% in Q3 following Q2’s 2.9% rise, while fixed investment dropped 13.7% in the quarter (Q2: -1.9% SAAR).

On the external front, exports of goods and services rose 8.0% in Q3 (Q2: -17.0% SAAR), while imports of goods and services dipped 2.3% (Q2: +2.1% SAAR).

Meanwhile, a flash estimate released by Statistics Canada showed the economy grew 0.8% on a seasonally-adjusted month-on-month basis in October, which was stronger than September’s 0.1% expansion.

Commenting on the outlook, Sri Thanabalasingam, senior economist at TD Economics, noted:

“Looking ahead, the good news is that global supply chain issues are showing signs of easing. Shipping costs have declined, and production in Asia is picking up. The bad news is that new headwinds are forming for the Canadian economy. Flooding in B.C. is wreaking havoc on communities, farmlands and shipping routes. This will undoubtedly weaken near-term growth. Adding to the woes is the recent emergence of the Omicron Covid-19 variant. Not much is known about this strain at this point, but if it proves to be more dangerous than other variants or vaccines less effective against it, it will be the key downside risk to Canada’s economic recovery.” 

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