FADING GROWTH
GDP numbers for end of 2017 show last year’s rapid expansion is truly in the past,
OTTAWA— The Canadian economy expanded at an annual pace of 1.7 per cent in the final months of 2017 as the more rapid growth seen earlier in the year faded further away, Statistics Canada reported Friday.
The agency’s latest numbers for real gross domestic product showed the economy grew three per cent for all of 2017 — a much-stronger pace compared with 2016 when growth was 1.4 per cent.
Growth in the fourth quarter was driven by a 2.3-per-cent increase in business investment compared with the third quarter, and a 0.5-per-cent quarter-over-quarter rise in household spending, the report said.
Overall, the fourth-quarter came in higher than the third quarter, which was revised down to an annualized rate of 1.5 per cent from 1.7 per cent.
BMO chief economist Douglas Porter said the solid contents behind the fourth-quarter report, such as the figures for business investment and housing, gave it a “somewhat rosier glow.”
“The main message, though, is that the exciting growth from the middle of 2016 up until the middle of 2017 is now truly in the past, and the economy is back to the drudgery of slogging out something closer to potential of around two per cent,” Porter wrote in a note to clients.
For 2017 as a whole, Statistics Canada said household spending easily made the biggest contribution to growth, followed by inventory and business investment. Exports also grew for the second-straight year with gains in goods and services.
“Much of this growth was attributable to the first two quarters of 2017, with deceleration observed toward the end of year,” the report said.
The 3-per-cent figure for 2017 matches the projection by private- sector economists that was included in the federal budget Tuesday. The budget also predicted real GDP growth of 2.2 per cent in 2018 and 1.6 per cent next year.
Craig Alexander, chief economist for the Conference Board of Canada, said the country had the strongest growth in the G7 last year, but lost momentum and is now entering 2018 on a soft note at an increasingly uncertain time.
“This cooling in Canadian growth comes at a time when there are a host of downside risks to the domestic economy from abroad, particularly U.S. trade and tax policy,” Alexander said in a statement, referring to business fears concerns related to the unknowns of U.S. corporate tax cuts and NAFTA’s renegotiation. The reading on the economy follows a report Thursday by Statistics Canada that foreign direct investment in Canada amounted to $33.8 billion, the lowest level since 2010 and well off the record of $126.1 billion set in 2007.