Canadian economy surprises at 3.7 per cent growth
Despite best stretch in two years, experts still concerned with details
OTTAWA — The Canadian economy beat expectations in the second quarter with its strongest quarterly stretch of growth in two years, according to a report Friday by Statistics Canada.
The details, however, were less encouraging, many experts said.
The economy expanded at an annualized pace of 3.7 per cent in the second quarter — thanks in large part to a 3.7 per cent rebound in goods exports and a one per cent drop in import volumes.
For many analysts, Canada’s trade-driven boost was likely a temporary factor, particularly at a time of weakening global economic conditions.
“That clearly is not sustainable going forward, even without considering growing external headwinds from the U.S.-China trade war, Brexit uncertainty, headwinds from slower global growth,” said Nathan Janzen, senior economist for RBC Economics Research.
“But, I think, on balance you can still say that the economy looks like it was doing OK over the first half of the year.”
Overall, the reading showed a solid turnaround for an economy coming off its weakest back-toback quarters of growth since 2015. It also marked Canada’s fastest pace of growth since a 4.4 per cent reading in the second quarter of 2017.
Exports of energy products grew 5.9 per cent after posting a three per cent decline in the first quarter, farm and fishing products expanded 15.2 per cent following a 8.4 per cent contraction and non-metallic minerals rose 19 per cent for their strongest quarter in almost three years.
The headline GDP number was also supported by the one per cent drop in import volumes, compared with a 2.1 per cent increase in the first quarter.
Forecasts had pointed to a more modest rebound after the economy experienced a sudden deceleration over the winter caused in large part by a sharp decrease in oil prices.
Economists had expected growth at an annualized rate of three per cent for the second quarter, according to the financial markets data firm Refinitiv.
The Bank of Canada had projected second-quarter growth of 2.3 per cent.
Outside of Canada, there’s mounting evidence of slowing global growth — mostly a consequence of the deepening U.S.China trade war. The central bank will be forced to consider the trade-related concerns next Wednesday when it delivers its latest interest-rate announcement.