1.6% contraction of Canadian GDP in wake of Fort McMurray wildfire called 'blip' by Calgary expert

A Calgary economist says a major contraction in the national economy caused by this spring's massive wildfire in northern Alberta was really just a blip.

Statistics Canada released a report on Wednesday that says on an annualized basis, the economy shrank by 1.6 per cent in the second quarter — the largest quarterly decline in gross domestic product since the second quarter of 2009, when the country was grappling with the global financial crisis.

• ANALYSIS: Ottawa and its Alberta problem: Federal government keeps a close eye on province's economy

The federal agency blamed the 4.5 per cent drop in exports — especially energy products — in large part on the disaster, which saw many oilsands operations curtail production in May.

"It's entirely due to the fire. Had it not been for oil related shut downs and the drop in crude exports, refinery exports, second quarter GDP would actually have grown," said University of Calgary economist Trevor Tombe.

"So it's entirely … a Fort Mac fire story."

Already hurting from the drop in energy prices, the Alberta wildfires dealt a blow to the energy sector, forcing the evacuation of Fort McMurray, Alta., and the shutdown of several oilsands operations in the region.

Energy product exports fell 7.5 per cent, with crude and bitumen exports declining 9.6 per cent and refined petroleum products down a whopping 19.6 per cent.

Tombe predicts GDP will grow in the last half of 2016, even in Alberta.

"So it may be, that if oil prices don't continue to decline, that we've turned a corner and should see positive GDP growth for some time to come," he said.

"Once everything's back to normal, this should be looked at as a blip."

Statistics Canada also found that corporate profits were down significantly, another thing that can be traced back to the wildfire, Tombe says.

"Income is much lower, but that's almost entirely concentrated in the financial sector due to insurance payouts related to the Fort Mac fire," he said.

"So, all the large changes that we saw in the report can really be linked back to that major disaster in May."

• MORE ECONOMIC NEWS | Why Calgary's real estate prices haven't been hit as hard as the rest of the economy — yet
• MORE ECONOMIC NEWS | Alberta economy still the best in Canada by some measures