Canada: Economic growth accelerates in Q3 to fastest rate in two years
November 29, 2013
In the third quarter, GDP increased at a seasonally adjusted annualized rate (SAAR) of 2.7% over the previous quarter, which marked the fastest growth rate in eight quarters. The result came in above the 1.6% expansion recorded in the second quarter (previously reported: +1.7% quarter-on-quarter SAAR) and slightly overshot market expectations of a 2.5% increase.
Growth in Q3 was driven by stronger fixed investment, which rebounded to a 2.4% expansion after having contracted 0.5% in Q2. Private consumption grew 2.2% in the third quarter (Q2: +3.6% qoq SAAR) and government consumption grew just 0.4% (Q2: +1.7% qoq SAAR).
The external sector deteriorated in the third quarter. Exports of goods and services plunged from a 3.4% rise in the second quarter to a 2.0% contraction in the third. Imports also swung, falling from a 1.4% expansion in Q2 to a 1.4% decrease in Q3. As a result, the external sector's net contribution to overall growth fell from plus 0.6 percentage points to minus 0.2 percentage points.
According to its October Monetary Policy Report, the Central Bank projects the economy to grow 1.6% this year and 2.3% in 2014. FocusEconomics Consensus Forecast panelists 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 2.3%, which is down 0.1 percentage points from last month's projection.
Author: Carl Kelly, Economist