Canada: Economic growth accelerates in Q4 at fastest rate in over two years
February 28, 2014
In the fourth quarter, GDP increased at a seasonally adjusted annualized rate (SAAR) of 2.9% over the previous quarter, which marked the fastest growth rate in nine quarters. The result came in just above the 2.7% expansion recorded in the third quarter and overshot market expectations of a 2.6% increase. In the full year 2013, GDP expanded 2.0%, which was up from the 1.7% rise tallied in 2012.
Growth in Q4 was driven by stronger total consumption. Private consumption grew 3.1% in Q4 (Q3: +2.4% quarter-on-quarter SAAR) and government consumption expanded 1.6% (Q3: +0.4% qoq SAAR). In contrast, fixed investment tumbled from a 0.4% increase in Q3 to a 3.4% contraction in Q4.
In the external sector, exports of goods and services rebounded from a 0.1% fall in Q3 to a 1.7% expansion in the Q4. Imports also recovered, rising from a 1.0% contraction in Q3 to a 0.9% increase in Q4. As a result, the external sector's net contribution to overall growth fell slightly from 0.3 percentage points in Q3 to 0.2 percentage points in Q4.
According to its January Monetary Policy Report, the Central Bank projects that the economy will grow 2.5% in both 2014 and 2015. FocusEconomics Consensus Forecast panelists expect the economy to grow 2.4% in 2014, which is unchanged from last month's estimate. For 2015, the panel expects the economy to expand 2.6%.
Author: Carl Kelly, Economist