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By Anahita Alinejad
OTTAWA (MNI) - Canada's gross domestic product is expected to show soft
growth in the third quarter after a stunning gain in the second, with exports
hurt by global trade tensions and indebted consumers holding back.
The MNI Median shows a growth rate of 1.3% on a mix of global and domestic
uncertainties, far below the second quarter pace of 3.7% that was the fastest in
The global trade war is affecting business investment and exports and they
will likely contribute the most to the GDP slowdown. On the domestic side, while
consumer spending is likely to aid growth somewhat due to strong wage and
employment gains, the high debt-to-income ratio will constrain the increase.
High levels of household debt remain a source of concern in an economy that
has shown resilience this year, BOC Senior Deputy Governor Carolyn Wilkins said
in a speech last week.
The energy industry's production has also been disrupted by shutdowns.
However, surges in oil global prices in September might offset the declines.
Weakness in energy held growth under 1% in the fourth quarter of last year and
the first three months of 2019.
Statistics Canada also reports monthly GDP for September on Friday at 830am
EST, with the MNI median calling for a 0.1% increase, the same as in the prior
two months. In September, declines in manufacturing and retail sales, as well as
reduced working hours, curbed growth in other sectors. Wholesale sales rose 1%,
mainly offsetting an August decline, and construction and real estate showed
The MNI Median for the third quarter of +1.3% matches the BOC forecast for
the second half of the year.
Unexpected weakness in manufacturing and trade, or consumer spending being
crippled by high debts, could signal the BOC needs to cut interest rates. The
BOC has said that so far the economy has stayed close to full output,
unemployment is low and inflation is close to its 2% target.
--MNI Ottawa Bureau; +1 613 981-1671; email: email@example.com