Canada: Economic growth slows in Q3, but beats expectations
November 27, 2014
In the third quarter, GDP increased at a seasonally adjusted annualized rate (SAAR) of 2.8% over the previous quarter. The result came in below the 3.6% expansion recorded in the second quarter but exceeded market expectations of a 2.1% increase.
The slowdown in Q3 was driven by a deceleration in both domestic demand and the external sector. Private consumption grew 2.8% in Q3 (Q2: +4.4% quarter-on-quarter SAAR) and government consumption swung to a 0.1% contraction (Q2: +1.2% qoq SAAR). However, fixed investment accelerated from a 3.1% rise in Q2 to a 5.3% expansion in Q3, which marked an over two year high.
In the external sector, exports of goods and services decelerated rapidly from a 19.0% expansion in Q2 to a 6.9% increase in Q3. Imports also slowed, falling to a 4.0% expansion from the 9.8% increase recorded in Q2. As a result, the external sector’s net contribution to overall growth decreased from 2.7 percentage points in Q2 to 0.9 percentage points in Q3.