Canada: expect a tangible acceleration in GDP growth in Q4
Needless to say, last week’s international trade data rocked the boat for Canadian forecasters. Export volumes jumped 8.1% in December alone. For the entire quarter, exports were up a whooping 27.3% on an annualized basis while imports decreased 3.9%. The contribution to GDP growth coming from net exports should be stratospheric in Q4 at above 6 percentage points, a very rare phenomenon historically. Even if business inventories are poised to shave several percentage points to growth, net exports will be able to more than offset a first significant slowdown in domestic demand. As today’s Hot Charts shows, Canadian real GDP growth is set to accelerate significantly in Q4 with a 4% gain. This would represent almost twice the BoC’s forecast in its latest Monetary Policy Report.
Given the fact that this strength is happening at the end of 2010, this should lift 2011 GDP level enough to reach 3% GDP growth this year, well above the Canadian speed limit. For more details, see our upcoming Weekly Economic Letter to be published on Monday.
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