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Canada: Economic growth decelerates to lowest rate in over a year in Q1

June 4, 2014

In the first quarter, GDP increased at a seasonally adjusted annualized rate (SAAR) of 1.2% over the previous quarter, which marked the lowest growth rate in five quarters. The result came in well below the 2.8% expansion recorded in the fourth quarter and undershot market expectations of a 1.8% increase.

The deceleration in Q1 was driven by weaker growth in all expenditure categories. Private consumption grew 1.2% in Q1 (Q4: +2.4% quarter-on-quarter SAAR) and government consumption contracted 0.5% (Q4: +0.3% qoq SAAR). Fixed investment decreased from a 2.4% contraction in Q4 to a 3.8% contraction in Q1.

In the external sector, exports of goods and services swung from a 3.9% expansion in Q4 to a 2.4% contraction in Q1. Imports also decreased, falling from a 1.5% expansion in Q4 to a 7.2% contraction in Q1. As a result, the external sector’s net contribution to overall growth increased from 0.7 percentage points in Q4 to 1.6 percentage points in Q1.

According to its April Monetary Policy Report, the Central Bank projects that the economy will grow 2.3% in 2014 and 2.5% 2015. FocusEconomics Consensus Forecast panelists expect the economy to grow 2.3% in 2014, which is unchanged from last month’s estimate. For 2015, the panel expects the economy to expand 2.6%.


Author: Teresa Kersting, Economist

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Canada GDP Q1 2014

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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