Research Briefing | Jun 22, 2023

Historic wildfires could choke the Canadian economy this summer

Canada’s early-season wildfires have caused massive destruction and dislocation in their paths – we estimate they have already reduced GDP in Q2 by 0.1ppt.

What you will learn:

  • However, if predictions of record-breaking wildfires this summer are realized, our preliminary analysis suggests cuts to Q3 GDP could be between 0.3ppts and 0.6ppts. The higher estimate would be worse than the economic impact from the 2016 Fort McMurray fires.
  • The bulk of the hit to the economy will be in mining, quarrying, and oil and gas extraction in Alberta, Quebec, and British Columbia where fires have forced operations to shut down for various periods since mid-May.
  • Wildfire smoke is also causing bouts of poor air quality across much of Canada and parts of the US. So far, we don’t think this has had a measurable macroeconomic impact. But, if the wildfires lead to a large number of poor air quality days this summer, outdoor economic activities like recreation travel, tourism and construction could be disrupted.
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