Canada: Economic growth slows in Q2 but beats forecast
August 30, 2013
In the second quarter, GDP increased at a seasonally adjusted annualized rate (SAAR) of 1.7% over the previous quarter. The result came in well below the 2.2% expansion recorded in the first quarter (previously reported: +2.5% quarter-on-quarter SAAR) and slightly above market expectations of a 1.6% increase.
Growth in the second quarter was driven by stronger domestic demand. Private consumption grew 3.8% in the second quarter (Q1 2013: +1.3% qoq SAAR), the strongest expansion since Q4 2010, and government consumption grew 2.2% (Q1: +1.2% qoq SAAR). Meanwhile, fixed investment contracted 1.2% (Q1: -1.5% qoq SAAR).
The external sector deteriorated in the second quarter as imports outpaced exports. Exports of goods and services fell from a 5.2% rise in the first quarter to a moderate 0.9% expansion in the second. Imports also decelerated from a 2.4% expansion in Q1 to a 1.5% increase in Q2.
According to its July Monetary Policy Report, the Central Bank projects the economy to grow 1.8% this year and 2.7% in 2014. FocusEconomics Consensus Forecast panellists are slightly more optimistic and expect the economy to grow 1.7% in 2013, which is unchanged from last month's estimate. For 2014, the panel expects the economy to expand 2.5%.