Canada: Exports boost economic growth in third quarter
November 30, 2011
In the third quarter, GDP increased 3.5% in seasonally adjusted annualized terms over the previous quarter. The result contrasted the second quarter's 0.5% contraction (previously reported: -0.4% quarter-on-quarter, saar) and came in above market expectations, which had GDP expanding 3.0%. The increase was mainly driven by a strong rebound in net exports, whereas domestic demand's contribution to overall economic growth diminished in the third quarter. Private consumption slowed from a 2.1% increase in the second quarter to a 1.2% rise in the third quarter, while business fixed investment decelerated from a 9.6% expansion in the second quarter to a 1.6% rise in the third. Moreover, government consumption increased a meagre 0.9% in the third quarter (Q2: +1.1% saar). Simultaneously, exports grew a whopping 14.4% in the third quarter (Q2: -6.4% saar), while imports contracted 3.2% (Q2: +13.6% saar). As a result, the contribution from net exports to overall economic growth improved from minus 10.4 percentage points in the second quarter to plus 4.4 percentage points in the third. Meanwhile, GDP increased 0.2% in September over the previous month in seasonally adjusted terms, which represented half of August's 0.4% increase but was exactly in line with market expectations. On an annual basis, GDP grew 3.0%, which was up from the 2.6% recorded in August. The annual average growth rate stabilized at 3.1% in September, with manufacturing being the main contributor. The Central Bank estimates that the economy will grow 2.1% in 2011 and 1.9% in 2012.