In this special edition of the Economic Pulse, RBC Deputy Chief Economist Dawn Desjardins provides an in-depth summary of three key themes from the September 2021 Macroeconomic Outlook report.
Theme 1: Countries on the road toward pre-pandemic GDP
Most of the countries we cover managed to plow through the second quarter posting strong gains with the US even surpassing its pre-pandemic level of GDP. Canada, however, was the outlier and GDP fell in the quarter mainly due to restrictions remaining in place longer than in other countries.
While these headwinds will continue to blow in the months ahead, we do not expect them to push the economies off course with high vaccination rates making another round of restrictions unlikely and supply chain and labour shortages likely to abate as activity levels return to more normal levels.
Theme 2: Canada hits a bump in Q2
In Canada, the second quarter provided a negative surprise with GDP falling at just over a 1% annualized rate. The sources of the weakness included a pullback in spending on goods, a drop in residential investment and sharply lower exports.
Theme 3: Business investment to increase
Business investment was one of the bright spots in the second quarter as companies geared up to meet rising demand. While many business are investing to increase capacity, they are facing challenges getting workers.
This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. The reader is solely liable for any use of the information contained in this document and Royal Bank of Canada (“RBC”) nor any of its affiliates nor any of their respective directors, officers, employees or agents shall be held responsible for any direct or indirect damages arising from the use of this document by the reader. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates. This document may contain forward-looking statements within the meaning of certain securities laws, which are subject to RBC’s caution regarding forward- looking statements. ESG (including climate) metrics, data and other information contained on this website are or may be based on assumptions, estimates and judgements. For cautionary statements relating to the information on this website, refer to the “Caution regarding forward-looking statements” and the “Important notice regarding this document” sections in our latest climate report or sustainability report, available at: https://www.rbc.com/community-social- impact/reporting-performance/index.html. Except as required by law, none of RBC nor any of its affiliates undertake to update any information in this document.