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.