Canada: Economic growth accelerates to a one year high in Q1
May 30, 2011
In the first quarter, GDP added 3.9% in seasonally adjusted annualised terms. The result was above the fourth quarter's 3.1% quarter-on-quarter saar increase, although slightly below market expectations, which had seen GDP expanding 4.0%. The solid Q1 performance mainly reflected positive developments in the domestic demand component, boosted by a surge in business investment. Business fixed investment grew 12.0% in the first quarter (Q4: 7.8% saar) as businesses begin to regain competitiveness and manufacturers restocked their inventories. Private consumption expanded a subdued 0.2%, following the 4.4% rise in the fourth quarter. The external sector remained strong in the first quarter. Exports added 6.4% in the first quarter (Q4: +8.8% saar), while imports rebounded from a 0.5% contraction in the fourth quarter to a 9.1% increase in the first, helped by a strong Canadian dollar. As a result, the contribution from net exports to overall economic growth deteriorated from a 2.1 percentage point addition in the fourth quarter to a 1.6 percentage point detraction in the first. Meanwhile, in March, GDP increased 0.3% over the previous month in seasonally adjusted terms, contrasting February's 0.1% contraction and coming in just above market expectations of a 0.2% rise. On an annual basis, GDP grew 2.6%, down from a 2.9% increase observed in February. The annual average growth rate fell from 3.6% in February to 3.5% in March. The Central Bank estimates the economy to grow 2.9% in 2011, before decelerating to a 2.6% expansion in 2012.