National Bank of Poland likely to stand pat in October, inflation to remain above 2.5 pct target until end-2020
Canadian economic growth contracts sharply in Q2 2020
Canadian economic growth contracted 38.7 percent in the second quarter as the pandemic-led restrictions on activity in April shut down activity in several parts of the economy. On a year-on-year basis, economic output was down 13 percent. Nominal GDP was down 14.8 percent relative to the end of 2019.
Unsurprisingly, given its high share of total economic activity and the effect of social distancing measures, consumer spending led the contractions, falling 43 percent. In line with the nature of the shock, the decline was mostly seen in services, but spending on durable goods also dropped noticeably. After a decent gain in the first quarter on stockpiling of food and supplies, spending on non-durable goods dropped 13.8 percent.
Business investment recorded a huge fall of 56.7 percent in the second quarter. Spending on machinery and equipment dropped 64.6 percent on widespread softness. Residential investment dropped 47.6 percent, with all major categories falling. Border issues and shutdowns hammered international trade. Exports dropped 55.6 percent, while imports dropped even more, falling 64.1 percent on the quarter. This meant that final domestic demand was just marginally better than headline GDP, declining 37.4 percent in the second quarter.
Employment was strongly impacted in the second quarter, reflected in a 31.1 percent fall in the compensation of employees. Nevertheless, government transfers more than made up the difference, driving a 50.9 percent annualized rise in household disposable income. With spending down, the household savings rate rose to 28.2 percent. The gross operating surplus dropped 36.6 percent. June recorded a GDP growth of 6.5 percent month-on-month, on a wide basis.
“The flip side of the coin is that as significant as the damage was, it was largely contained to March and April. June's solid outturn and positive developments since then, including an estimated 3% m/m gain for July point to a strong, if partial, recovery in activity over the summer months as social distancing measures have been eased”, said TD Economics in a research report.