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Canada: Economic growth contracts again in Q2

September 1, 2015

In the second quarter, GDP fell at a seasonally adjusted annualized rate (SAAR) of 0.5% over the previous quarter. The result was a moderation from the 0.8% contraction recorded in the first quarter and exceeded market expectations of a 1.0% contraction.

The deterioration in Q2 was driven by a decrease in domestic demand that more than offset an improvement in the external sector. Private consumption grew 2.3% in Q2, which was up from the 0.5% increase seen in the previous quarter. Fixed investment witnessed a sharp 6.1% contraction in Q2, which was nonetheless an improvement over the significant 8.3% decrease observed in Q1. In contrast, government consumption rebounded from a 0.2% contraction in Q1 to a 1.2% expansion in Q2, thus marking the fastest increase in four quarters.

In the external sector, exports of goods and services grew 0.4% in Q2, which contrasted the 1.4% decrease seen in the previous quarter. Imports inched down from a 1.4% decrease in Q1 to a 1.5% contraction in Q2. As a result, the external sector’s net contribution to overall growth moved from a flat reading in Q1 to plus 0.6 percentage points in Q2, which marked the highest contribution in three quarters.

According to its January Monetary Policy Report, the Central Bank projects that the economy will grow 2.1% in 2015 and 2.4% in 2016. FocusEconomics Consensus Forecast panelists expect the economy to grow 2.2% in 2015, which is down 0.1 percentage points from last month’s estimate. For 2016, the panel expects the economy to also expand 2.2%.


Author:, Senior Economist

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Canada GDP Q2 2015

Note: Quarter-on-quarter changes of seasonally adjusted annualized GDP and year-on-year variation in %.
Source: Statistics Canada (SC) and FocusEconomics Consensus Forecast


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