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.
Author: Dirina Mançellari, Senior Economist