Real gross domestic product (GDP) fell in every province and the Northwest Territories in 2020 and rose in Yukon and Nunavut after the World Health Organization declared COVID-19 a pandemic on March 11.

Pandemic impacts gross domestic product in all 13 Canadian jurisdictions

Over the course of the year, all levels of government in Canada implemented measures to limit the spread of the virus. Government measures combined with a shift by many Canadians to work from home, affected almost every segment of the Canadian economy.

For most provinces, the economic contraction in 2020 was the most severe observed in 40 years. The impact on GDP varied across the country, reflecting differences in the extent to which new and continuing public health restrictions were imposed in the provinces and territories.

Ontario (-1.95%) contributed the most to the decline at the national level, largely because of the size of its economy. Alberta accounted for 1.25% of the national decline, as ongoing weak oil prices on world markets, combined with the impact of the pandemic, suppressed activity in the important oil and gas sector and related downstream industries. In turn, Quebec accounted for 1.05% of the total decrease at the national level, and British Columbia represented 0.51% of the decline.

Widespread contraction in services-producing industries main driver of decline in 2020

Both goods-producing and services-producing industries contracted in every province. However, services-producing industries contributed more to the overall decline. The contraction in services-producing industries was widespread, with the largest impact on those services that require in-person interaction and where online delivery is unfeasible or not economically viable. Particularly hard hit were transportation and warehousing, arts, entertainment and recreation, accommodation and food services, and other services (except public administration).

Transportation and warehousing fell significantly across Canada, led by air transportation as severe restrictions on travel were imposed. Transit, ground passenger and scenic and sightseeing transportation saw a marked drop in ridership, due to measures to promote work from home and limit non-essential trips. Along with these travel restrictions, government-imposed limits on gatherings led to a sharp contraction in accommodation and food services, arts, entertainment and recreation industries, as well as other services (except public administration).

Health care and social assistance were down in 2020 as offices of physicians, dentists and medical and diagnostic laboratories reduced many of their in-person visits and activities in response to restrictive health measures. Education services also declined across Canada as public authorities closed schools and universities, though the contraction was mitigated as classes moved online and eventually returned to an in-person or hybrid model.

In contrast, finance and insurance industries rose in all jurisdictions. Real estate and rental and leasing activities and residential construction increased in most regions in spite of lockdown measures. In many provinces, activity at the offices of real estate agents and brokers surged as the desire for more personal space, including room for home offices, combined with low mortgage rates and higher disposable income, bolstered the housing market.

Goods-producing industries contribute the most to the percentage change

Activity from goods-producing sectors was generally more variable from jurisdiction to jurisdiction than services-producing sectors, in part because it was somewhat less affected by the public health measures adopted to contain the pandemic. And, while services as a whole contributed more to the annual GDP declines in all provinces and territories, except Saskatchewan and Yukon, on an individual sector basis, goods-producing industries recorded the most significant contributions to percentage change (CPC) in most jurisdictions (whether growing or contracting). In Alberta (-2.07 CPC), Saskatchewan (-1.50 CPC) and all three territories, mining, quarrying, and oil and gas extraction impacted total GDP the most. Manufacturing was the primary driver in Quebec (-1.26 CPC) and Ontario (-1.25 CPC), while construction (-2.61 CPC) was the largest factor in the Newfoundland and Labrador economy in 2020.

For a full breakdown by province and territory, visit the Statistics Canada website. 

Source: Statistics Canada