OTTAWA: The Canadian economy grew 4.5 percent in the second quarter of 2017, the government statistical agency said Thursday, pushing beyond forecasts to the highest growth rate in 15 years. Analysts were expecting 3.1 percent growth during the period from April to June, but strong consumer spending and a surge in exports buoyed the results. This came after growth of 3.7 percent at the start of the year, when the economy roared back to life to jump ahead of Canada’s G7 peers after years of relative stagnation. This pace continued through June. By comparison, US gross domestic product (GDP) grew 3.0 percent in the latest quarter. “Canada’s second quarter let the good times roll, so much so that the country’s national humility has almost everyone assuming that this can’t last,” commented CIBC Economics analyst Avery Shenfeld. “Just about every source of demand did well,” he said, adding: “Odds of a September rate hike by the Bank of Canada are certainly enhanced by this report.”
Canada’s central bank raised its key lending rate by a quarter of a percentage point last month to 0.75 percent, responding to what it saw as “above-potential” economic growth. It was the first rate increase since 2010. According to Statistics Canada, household spending in the second quarter of this year rose 1.1 percent, led by outlays on cars. Water, electricity, gas and other fuels, and clothing and footwear also contributed to the increase. Housing costs, however, fell due to “a sharp decline in ownership transfer costs” of 6.7 percent, said Statistics Canada. A new tax on home purchases by non-residents of Ontario province also came into effect in April, putting downward pressure on real estate prices. Exports, meanwhile, rose 2.3 percent in the second quarter, led by a 9.2 percent increase in energy sales abroad. That included crude oil and natural gas exports. Industrial machinery, equipment and parts were also important contributors to export growth. A hike in imports was led by an increase in Canadian purchases of aircrafts and other transportation equipment, energy products, and motor vehicles and parts.
