Jeffrey Qián 錢 曄 // 778-238-2014 //

Canadian Economic Growth (Q1)

Growth in the Canadian economy was modestly worse than expected in the first quarter of 2015 with real GDP contracting at an annualized rate of 0.6 per cent. This was the first negative quarter for the economy since the second quarter of 2011. Household consumption was dragged down by lower incomes in oil-producing provinces and posted the smallest quarterly gain in three years at just 0.1 per cent. An oil-led second consecutive quarterly decline in exports, declining business investment and a fall in government spending were more than enough to offset meager gains in consumption spending to tip economic growth into negative territory. 

Most economists, including the Bank of Canada, anticipate that the negative impact of the collapse in oil prices will be largely contained in the first quarter and that growth will recover from the second quarter onward. The Banks choice to hold its overnight rate steady at its meeting earlier this week is a good indication that they do not see a further deterioration in the economy going forward. We expect that economic growth will accelerate from here, likely in a range of 2 to 2.5 per cent at a annualized rate for the remainder of the year. 

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