In Canada, economic activity expanded 10% at a seasonally adjusted quarterly rate during the third quarter of 2020, after contracting 11.5% in the second.
The recovery in private consumption and external sales contributed to this recovery. For its part, the unemployment rate decreased from 9.0% in September to 8.9% in October.
However, according to Banxico, more timely indicators such as retail sales, consumer confidence, business optimism and mobility indicators, suggest a moderation in the rate of recovery of economic activity in the fourth quarter as a reflection of the reimposition of containment measures derived from the strong increase in cases of Covid-19.
The measures introduced to contain the spread of Covid-19 caused a decrease in activity around the world, which in turn drove oil prices down and weakened industrial production and supply chains.
In this context, the Canadian government projects that its country’s exports will fall 9.4% in 2020 and imports, 9.3 percent.
Trade will recover in 2021. The higher increase in imports (+ 9.1%) than in exports (+ 5.0%) is mainly due to the need for companies to rebuild their inventories.
Furthermore, a stronger rebound in economic activity in Canada (+ 4.5%) than in the United States (+ 3.6%) will drive Canadian imports more than exports.
The impact of the health crisis on external demand for goods and services and on supply chains will cause a drop in exports. Also, according to Canadian trade, imports will also decline due to lower domestic demand.