Canadian Economic Growth (Q3) - November 28, 2014

BCREA ECONOMICS NOW

The Canadian economy posted a better than expected 2.8 per cent growth the third quarter of 2014, on the heels of even stronger 3.6 per cent growth in the second quarter. Economic growth was largely driven by residential investment which grew at its fastest pace since early 2012 as well as healthy gains in household consumption and exports.

 

The Canadian economy is on track to expand 2.4 per cent in 2014, a marked improvement on 2 per cent growth in 2013 and above what the Bank of Canada considers the economy's potential rate of growth (beyond which, inflation may trend upward).  We expect the economy to grow about 2.3 per cent in 2015, which should further reign in slack in the economy. The recent sharp decline in energy prices may trim economic growth, but it will also take the wind out of inflation next year. Overall, improving economic growth and modest inflation pressure is consistent with the Bank of Canada raising its target rate next year.