Canadian economy posts record drop in Q2 due to COVID-19

The economy posted its steepest decline on record in the second quarter as COVID-19 forced businesses to close.

Statistics Canada says real gross domestic product contracted at an annualized rate of 38.7 per cent.

That is the worst showing since the start of 2009, at the height of the global financial crisis.

Household spending on goods was down by 8.4 per cent, and down 16.7 per cent for services.

Business investment fell 16.2 per cent while employee compensation fell by 8.9 per cent as workers were laid off, furloughed, or had their hours slashed.

On Thursday, Bank of Canada governor Tiff Macklem told an international gathering of central bankers that not all small and medium-sized businesses are going to be able to reopen.

That will be especially the case in sectors such as restaurants and hospitality, where people are in close proximity.