Canada GDP


Canada: Economy contracts in Q1

May 29, 2015

In the first quarter, GDP contracted at a seasonally adjusted annualized rate (SAAR) of 0.6% over the previous quarter. The result contrasted the 2.2% expansion recorded in the fourth quarter of last year (previously reported: 2.4% year on year). Moreover, the print was the lowest since Q2 2009 and undershot market expectations by 0.9 percentage points.

The slowdown in Q1 was driven by a contraction in domestic demand, particularly in terms of investment. Private consumption grew 0.4% in Q1, which was down from the 2.1% increase seen in the previous quarter. Fixed investment contracted a dramatic 7.0% in the first quarter, which contrasted the 1.0% increase observed in Q4 and marked the lowest reading since Q1 2009. Government consumption also contracted, falling 0.8% from the previous quarter (Q4 2014: +1.0% yoy).

In the external sector, exports of goods and services fell 1.1% in Q4, which was an improvement over the previous quarter’s deterioration of 1.7%. In addition, imports fell 1.5% in Q1, contrasting the 1.6% rise in Q4. As a result, the external sector’s net contribution to overall growth rebounded from minus 1.1 percentage points in Q4 to 0.2 percentage points in Q1.

According to its April Monetary Policy Report, the Central Bank projects that the economy will grow 1.9% in 2015 and 2.5% in 2016. FocusEconomics Consensus Forecast panelists expect the economy to grow 2.2% in 2015, which is down 0.1 percentage points from last month’s estimate. For 2016, the panel expects the economy to also expand 2.2%.

Author:, Economist

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Canada GDP Chart

Canada GDP Q1 2015

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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