After a slow start to 2014, Canada’s economy grew at a 3.1% rate in the 2nd quarter
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In the second quarter of this year, Canada’s economy experienced a highly appreciated boost as households began spending more, to an annualized pace of 3.1%. This is the largest quarterly gain that Canada has experienced since 2011, in the third quarter. The increase in GDP, gross domestic product, was far larger than the rate of 2.7%, which is what economists were expecting. Following a slow start, which is estimated to be the economy’s worst performance in over a year, the country will benefit from the unexpected jump.
In the second quarter of this year, Canada’s economy experienced a highly appreciated boost as households began spending more, to an annualized pace of 3.1%. This is the largest quarterly gain that Canada has experienced since 2011, in the third quarter. The increase in GDP, gross domestic product, was far larger than the rate of 2.7%, which is what economists were expecting. Following a slow start, which is estimated to be the economy’s worst performance in over a year, the country will benefit from the unexpected jump.
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Statistics
Canada, announced recently that the real GDP for the country has increased by 0.8% throughout the second quarter. This is significant in comparison to the 0.2% increase that followed the first three months of 2014. The finance minister, Joe Oliver, stated that the news shows how well the government’s plan for the economy is working, ‘paying off’ for Canadians all across the country. They plan to focus on ‘jobs, growth, and long-term prosperity’.
It is not that difficult, all you have to do is lower the taxes and balance a budget.
A Slow Start
The Canadian economy experienced an unexpectedly poor start to this year, as severe weather hampered progress in spending throughout all industries. A statement by Statistics, Canada showed that the GDP experienced growth of only 1.2% during the first quarter, falling far short of the analysts’ expectations at 1.8%. This is also a serious slowdown from the 2.7% growth the country saw within the final quarter of 2013.
The start would not be that slow if Canada’s southern neighbor was not so stubborn and would just sign off on the Keystone Pipeline which would benefit both countries immensely.
Canadians are Fuelling the Country’s Growth
Statistics, Canada also found that economic activity has increased throughout all sectors, excluding non-profit institutions which serve households. Consumers have led the improvement, with a consumption increase per household of 0.9%. Canadians spent:
* 0.7% more on services
* 1.2% more on goods
* 2.9% more on investing in residential structures
Furthermore, home transfer costs were increased by 9% after a decline in the previous two quarters. Exports have also begun to rise, by 4.2% which is the strongest performance the country has experienced since the third quarter of 2011. Expert economists have suggested that the news is evidence of positive signs for Canada’s future. They believe that the Canadian economy is firing on multiple cylinders after an increasingly tough winter.
If the benefits that the country is currently seeing can transfer to stronger wage growth and increased employment in the Canadian labor market, then experts believe that this will reinforce the view that the Bank of Canada may increase interest rates at the end of next year.
Comparison to the US
In the US, GDP grew by 4.2% in the second quarter, after a contraction of 1% in the first. However, although the report seems positive, TSX/S&P traded lower, down by 17.8 points due to low consumer spending in the US which had begun to drag down the US markets. On the other hand, the Canadian dollar rose by 0.13 cents US.
