Canada Growth Skyrockets on Export Resurgence
A reversal in net exports helped to propel the Canadian economy to an accelerated pace of growth in the third quarter of this year. According to Statistics Canada, expansion in the world’s 10th largest economy grew at an annualized pace of 3.5% in the period leading up to September. The news has supported rising Canadian dollar demand – especially against the US dollar.
Canadian export recovery helped to fuel the 0.2% month over month climb in the country’s expansion as domestic companies benefited immensely from an almost 4% decline in the loonie against the US greenback. Exports grew by an alarming 14.4% annualized pace, the fastest rate in almost 7 years – reversing the 6.4% decline witnessed back in the second quarter of the year. Simultaneously, imports to Canada declined by 3.2% in the same period.
Although the report is widely positive for the economy, despite cuts in growth forecasts by Bank of Canada officials, some numbers are a bit worrisome. Domestic consumption remained relatively stable, only due to housing demand which advanced by 2.6% in the quarter. Meanwhile, both business investment and spending slowed, likely a reflection of lower business confidence seen earlier in the month. Should underlying pessimism continue, growth figures in the coming quarter may very well come into line with central bank forecasts – which are currently lower than 2%.
Nonetheless, Canadian dollar buyers are out in full force following the optimistic release. Rising to 1.0187 against the US dollar, the loonie is now trading higher by 1.23% or 127 pips.