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MNI POLITICAL RISK ANALYSIS - Week Ahead 28 Oct-3 Nov
Canada 2Q GDP Up 3.7%, Beats Expected 3.1%, Fastest in 2 Yrs>
By Greg Quinn
OTTAWA (MNI) - Canada's gross domestic product grew at the fastest
pace in two years in the second quarter, beating economist forecasts
as surging exports offset weak consumer spending and business
investment.
The economy grew at a 3.7% annualized pace versus the MNI
economist median of 3.1%. The quarter ended with a June GDP gain of
0.2% that was also faster than the 0.1% MNI median. Statistics Canada
also boosted first-quarter growth to 0.5% from 0.4%.
The expansion is also much stronger than the Bank of Canada's
projection of 2.3%, meaning policy makers have less reason to signal
the need for an interest-rate cut at their meeting next Wednesday.
The GDP gain rounds out an economy showing other signs of resilience
such as inflation at the BOC's 2% target and unemployment near
record lows.
Investors have still raised bets in the last few weeks on Governor
Stephen Poloz cutting the 1.75% rate in October because of growing signs
of a global trade war. The last rate decision amplified warnings about
the damage from the U.S.-China dispute while affirming that monetary
policy remained appropriate.
Today's GDP report did show some signs that the current growth rate
will likely slow in the second half of the year. Exports rose 13.4% in
the second quarter, the fastest in five years, partly reflecting a
short-term rebound in oil production.
Imports declined 4 percent on a large drop in aircraft shipments,
suggesting a reversal in the next quarter that could slow Canada's
growth further.
The bigger problem could be weakness in the domestic spending that
has carried the economy for much of the last decade. Household spending
growth slowed to 0.5% from 2.9% in the first quarter, with the weakest
gain in seven years led by falling automobile purchases.
Business spending on non-residential buildings, machinery and
equipment fell for the fourth time in five quarters between April and
June. Spending fell 16.2%, the most since the end of 2016.
--MNI Ottawa Bureau; email: greg.quinn@marketnews.com, +1-613-314-9647
[TOPICS: MACDS$,M$C$$$]
To read the full story
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.