On Friday, Statistics Canada’s latest reading for real gross domestic product revealed the extent of the economic damage caused by the blaze that roared through the heart of oilsands country.
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Poloz kept his key lending rate at 0.5 percent on July 13, pointing to signs oil production was resuming after fires knocked about 1 million barrels a day offline and forced the evacuation of 80,000 people from Fort McMurray.
“The mining, quarrying, and oil and gas extraction sector fell 6.4%, as the output of the non-conventional oil extraction industry recorded a 22% drop”, the release said.
Stripping out the impact of the wildfires on the national economy, GDP shrank by 0.1 per cent in May, fuelled in part by manufacturing declines.
“There were fires raging in Alberta, but the rest of the economy wasn’t so hot”, said Shenfeld.
The May headline number for real GDP followed a slim economic growth reading of 0.1 per cent in April.
TD Bank economist Brian DePratto said, “When we look through the wildfire-generated volatility, the picture that emerges is of an economy that, following a strong December and January, has been just trudging along”. The services sector held up relatively well with a 0.3 percent gain.
A sharp rebound is anticipated in the third quarter, with the Bank of Canada projecting 3.5 percent annualized growth. In April, before the wildfires, the bank had forecast the economy would grow in the quarter by one per cent.
The Canadian dollar strengthened against the greenback immediately following the data, though investors were also taking in disappointing second-quarter US growth figures.
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Revenue from insurance policy premiums was $2.46 billion, up five per cent from $2.34 billion a year ago, but underwriting income fell to $16 million from $158 million as the fire offset growth elsewhere.
