Canada: Q2 GDP forecasted to decline – RBC CM

Sue Trinh, Senior Currency Strategist at RBC Capital Markets, suggests that the RBC economists forecast a 1.5% q/q (annualized) decline in Canada’s GDP in Q2 (in line with consensus), driven by the impact of oil sands production disruptions in May and (to a lesser extent) June.

Key Quotes

“It is a relatively weak quarter even without these impacts, with household consumption expected to contribute only 0.5pp after a 1.3pp add in Q1, while net exports is slated for a 4.5pp detraction. A partial offset should come from a sizeable inventory build (+2.5pp contribution). The BoC forecasted a 1.0% q/q (annualized) decline in the quarter in its July MPR. We expect the June industry level GDP report to show a 0.4% gain, with 0.3pp of this from the partial return of oil sands production in the month.”