Canada: Growth remains sluggish in the final quarter of 2012
March 1, 2013
In the fourth quarter, GDP increased at a seasonally-adjusted annualized rate (saar) of 0.6% over the previous quarter. The result came in slightly below the 0.7% expansion recorded in the third quarter (previously reported: +0.6% quarter-on-quarter saar) but in line with market expectations. In the full year 2012, the economy expanded 1.8% after growing 2.6% in 2011.
On the domestic side, private consumption grew 2.7% in the fourth quarter (Q3 2012: +2.8% qoq saar), while government consumption rebounded from a 0.4% contraction in Q3 to a 1.8% rise in the fourth quarter. In addition, fixed investment expanded 2.9% (Q3: -1.9% qoq saar). That said, growth in the fourth quarter was negatively affected by a sharp drop in inventories.
Meanwhile, exports of goods and services swung from a 7.3% contraction in the third quarter to a 1.2% rise in the fourth, whereas imports declined 1.0% (Q3: +2.1% qoq saar). As a result, the contribution from net exports to overall economic growth improved from minus 3.0 percentage points in the third quarter to plus 0.7 percentage points in the fourth.
According to its January Monetary Policy Report, the Central Bank projects the economy to grow 2.0% this year and 2.7% in 2014 (previously forecasted: 2.3% and 2.4%, respectively). FocusEconomics Consensus Forecast panellists are slightly less optimistic and expect the economy to grow 1.9% in 2013, which is down 0.1 percentage points from last month's estimate. For 2014, the panel expects the economy to expand 2.5%.