Canada’s real GDP expands 0.6% in Q1, driven by exports

31 May 2013 15:45  [Source: ICIS news]

TORONTO (ICIS)--Canada’s real gross domestic product (GDP) rose 0.6% in the 2013 first quarter, from the 2012 fourth quarter, driven by a 1.5% increase in exports, the country federal statistics agency said on Friday.

On an annualised basis, Canada’s GDP expanded 2.5% in the first quarter, compared with real GDP growth of 2.4% in the US, Statistics Canada said.

Nominal GDP was up 0.9% in the first quarter from the 2012 fourth quarter, "the fastest pace in five quarters," the agency said.

Exports were the largest contributor to growth in the first quarter. Export volumes increased 1.5%, after a gain of 0.2% in the fourth quarter of 2012 and declines in the previous three quarters.

Imports of goods rose 0.7%. Most major categories of goods imports were up, including imports of basic and industrial chemicals, plastic and rubber products, which rose 1.9%.

Canadian domestic demand edged up 0.1%, the weakest showing since the first quarter of 2009.

Consumer spending was up 0.2%, sustained by higher spending on services.

Investment declined as business investment in residential structures fell 1.2%. New home construction declined and housing resale activity showed continued weakness.

Business investment in plant and equipment was up 0.2%, following a 1.3% increase in the previous quarter.

Eric Lacelles, chief economist at Toronto-based investment firm RBC Global Asset Management, said that a recent slight deterioration in global trends meant that "we cannot 2.5%-type [annualised GDP growth] numbers to persist" in coming quarters.

Canada was growing at a very slow trend rate, below its potential rate of growth, Lacelles said.

"The domestic side of the economy didn’t do a whole lot [in the first quarter]," he added.

"We can’t grow particularly quickly, if housing is in correction mode and consumers are cautious, and if businesses are cautious as well," he said.

"Hopefully trade will bail us out," he said, pointing to economic growth in the US, which is Canada’s main trading partner.

Paul Hodges studies key influences shaping the chemical industry in his Chemicals and the Economy Blog

By: Stefan Baumgarten
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