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.
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