Tuesday, April 18, 2017

Economic growth picks up, but Bank of Canada is still cautious

In January, the Bank of Canada expected that the country’s GDP would rise by 2.5% in the first quarter. The Bank’s recent report revised the growth estimate up to the surprisingly high 3.8%. The estimate for the whole of 2017 was revised up from 2.1% to 2.6%.
This is where the Bank becomes more cautious about the Canadian GDP’s prospects. The report notes that the investment growth in the oil and gas sector resumed after a long period of steep declines but that in the current price environment this pace of growth is unlikely to continue. The Bank calls the growth in the first quarter “temporary” and expects that the GDP growth will slow down to 1.9% in 2018 and 1.8% in 2019.
Statistics Canada issued an interesting information this week which illustrates the Bank of Canada’s cautiousness about investment in Canada. Investment in non-residential building construction was down 0.5% in the first quarter this year from the previous quarter. This marked the sixth decrease in seven quarters. Apparently, investment activity outside of residential construction in Canada remains weak.

Source: Statistics Canada
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