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Quebec: Real GDP Climbed 3.4% in the Second Quarter
By Hélène Bégin, Senior Economist
HIGHLIGHTS
f Annualized real GDP was up 3.4% in the second quarter compared to the previous quarter. Growth for the first quarter was revised from 5.9% to 7.7%.
f In June, real GDP by industry rose 0.9%, after declining 0.4%
in May.
f The annual variation in real GDP for the first half of the year was 9.6% in Quebec, compared to 6.1% in Canada, which posted negative growth for the second quarter.
f The second quarter’s strong results were due to accelerated domestic demand, which saw an annual increase of 5.3%.
This was primarily thanks to a rebound in consumer spending after a difficult year due to some closures.
f Spending on goods recovered slightly (+0.8%), while spending on services bounced back significantly (+12.4%).
f Residential investment continued to grow due to new construction and renovations, whereas ownership transfer costs fell for a third consecutive quarter.
f Business investment performed well in the second quarter, seeing annualized growth of 8.9% for machinery and equipment and 2.9% for non-residential structures.
f Exports declined in the second quarter, while imports rose sharply. As a result, Quebec’s trade deficit widened to $17.7B in 2012 dollars.
COMMENTS
Quebec’s economy, which recovered last spring, posted more subdued growth than in previous quarters. The gradual reopening process, which began in the spring, finally led to a rebound in spending on services. However, there’s still a long way to go in this area, unlike spending on goods, which quickly recovered after the Great Lockdown in the spring of 2020. The savings rate remained high, at 16.1% for the second quarter.
ECONOMIC STUDIES | SEPTEMBER 23, 2021
Households therefore have plenty of wiggle room to help boost spending on services.
Residential investment posted a strong performance despite the decline in resale market activity, which has been underway since late 2020. The start-up of a number of construction sites early in the year spurred new construction in the second quarter.
IMPLICATIONS
This morning’s results are consistent with our scenario. The second quarter’s weaker-than-anticipated performance was more than offset by the revised real GDP growth for the first quarter.
Although Quebec was hit with a fourth wave, further closures will likely be avoided due to the introduction of the vaccine passport on September 1. The next few quarters look promising, although there’s still some uncertainty over how the pandemic will unfold.
GRAPH
Strong real GDP growth slows to a more moderate pace after the recovery period
Sources: Institut de la statistique du Québec and Desjardins, Economic Studies Real GDP
Quarterly annualized variation in %
-40 -20 0 20 40 60
2019 2020 2021
