First-Quarter GDP Registers Biggest Drop In 18 Years
Posted June 1, 2009 12:00 pm.
This article is more than 5 years old.
Gross domestic product – the value of all goods and services produced in Canada – declined 1.4 per cent in the first quarter, the largest quarterly decrease since 1991.
Statistics Canada reports both domestic and international demand continued to weaken as the GDP contracted at an annualized rate of 5.4 per cent in the first quarter, compared with a 5.7 per cent decline in the U.S. economy.
GDP was down 0.3 per cent in March from February.
The agency says lower spending in Canada and the United States, particularly business investment in plant and equipment, led to a sharp decline in Canada’s exports and imports.
Business investment in Canada fell at the fastest rate since 1982.
Final domestic demand was down 1.5 per cent as personal spending, particularly on durable goods, continued to decline.
Corporate and personal income also fell in the quarter.
Lower production of goods (down four per cent) led the decline in the first quarter of 2009, while the production of services decreased 0.5 per cent.
All goods-producing sectors retreated. The manufacturing sector, pulled down by a 26 per cent reduction in motor vehicle and parts production, accounted for about half of the overall decline in the first quarter of 2009.
Wholesale trade and transportation services declined the most among the service-producing sectors. Increases in the public sector (which includes education, health and social services, as well as public administration) helped mitigate the decline in the production of services.
Consumer spending on goods and services contracted 0.4 per cent, a slower pace of decline than the previous quarter. Spending on durable goods (down 1.8 per cent) was the major contributor to the first quarter decline, but did not drop as much as in the previous quarter. Purchases of services slipped for a second consecutive quarter.
Exports of goods and services dropped 8.7 per cent in the first quarter, a faster rate of decline than in the fourth quarter (down 4.8). Exports of automotive products were down for the eighth straight quarter, falling an additional 33 per cent.
Imports were down for a third quarter in a row, falling 11 per cent, as both goods and services imports declined. Weak domestic demand led to decreases in nearly all major import categories. The Canadian dollar depreciated 2.6 per cent against its U.S. counterpart in the quarter.
Business investment in machinery and equipment was down 11 per cent in the first quarter, as investment declined in all categories.
