Canada economy grows at its fastest pace in a year as exports surge

Canada’s
PM Trudeau speaks during a press conference where Alphabet Inc,
the owner of Google, announced the project “Sidewalk Toronto”,
that will develop an area of Toronto’s waterfront using new
technologies to develop high-tech urban areas in
Toronto
Thomson
Reuters

• Canada’s GDP grew at the fastest pace in a year between
  April and June.
• An uptick in exports and consumer spending helped boost
  growth.
• The data comes ahead of Bank of Canada meeting next
  week.

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Canada’s economic growth accelerated in the second quarter at the
fastest pace in a year, driven by a sharp increase in exports and
consumer spending.

Gross domestic product expanded at an annualized pace of 2.9%
from April to June, Statistics Canada said Thursday, up from 1.4%
growth in the first quarter. The figure missed economist
expectations for 3% growth, but beat Bank of Canada estimates of
2.8%.

Household spending rose 0.6%, twice the pace of the first quarter
and reversing a downward trend over the previous three quarters,
helped by a 0.8% rise in outlays on services.

Exports notched the largest advance in more than four years at
2.9% on a non-annualized basis, largely thanks to increased
shipments of energy products, consumer goods and pharmaceutical
products. 

The data comes ahead of a central bank meeting next week, where
economists expect the Bank of Canada to hold the benchmark
interest rate steady. The central bank has hiked rates four times
since last July, with the
most recent coming last month.

Stephen Brown, senior Canada economist at Capital Economics, said
the strong pace of growth in the second quarter will embolden
policymakers. But he added the central bank will also be keeping
a close eye on
NAFTA negotiations between the US and Canada this week.
President Donald Trump had threatened to terminate the
24-year-old agreement and to hit Canada with auto tariffs.

“Nevertheless, the Bank of Canada is still likely to keep to its
commitment to proceed gradually with interest rate rises, by
remaining on hold next week before hiking in October,” Brown
said.