Canada: GDP up but details mixed – RBC
|Nathan Janzen, senior economist at Royal Bank of Canada, notes that the Canadian GDP increased 3.7% (annualized) in Q2 but the stronger-than-expected Q2 increase was entirely due to a huge 5.4 percentage point add to growth from net trade.
Key Quotes
“That more-than-reversed a big drag from net trade in Q1 – and is clearly unsustainable going forward, even without considering growing external headwinds from slower global growth, an escalating US-China trade war, Brexit uncertainty, etc. ‘Final domestic demand’ declined in Q2 as consumer spending growth slowed and business investment declined.”
“Still, the quarterly GDP numbers are often volatile, and surprisingly soft details from the Q2 report followed surprisingly strong details in Q1 (when final domestic demand jumped 3.2% and net exports were weak.)”
“From the Bank of Canada’s perspective, though, the Q2 report will do nothing to alleviate concerns that an increasingly uncertain external growth backdrop will slow the Canadian economy going forward. We continue to expect the Canadian central bank will follow other global peers with a rate cut. Probably not at next week’s policy decision but with the risks tilted to an earlier cut than the Q1-2020 move we have in our current base case.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.