Governor Tiff Macklem will probably be feeling
happy with the initial stages of the recovery. While
the second-quarter GDP data confirmed that output
contracted by 39% annualised, that was at least
better than the 44% drop expected by the Bank in its
July Monetary Policy Report. Moreover, following
the 6.5% m/m rise in GDP in June, Stats Can said its
preliminary data point to a further 3% rise in July.
(See Chart 1.) That puts the economy on track for a
45% expansion in the third quarter, which is also
stronger than the Bank’s forecast, of 32%. In all, the
data support our forecast that GDP will fall by 6%
this year, less than the Bank’s forecast of a 7.8%
drop.
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