GDP Growth Increases in the Second Quarter of 2019
Statistics Canada’s gross domestic product, income and expenditure report states that real gross domestic product (GDP) had a 0.9 per cent increase in the second quarter, after edging up 0.1 per cent in each of the previous two quarters.
This growth was led by a 3.2 per cent rise in export volumes, while final domestic demand edged down (-0.2 per cent).
Real GDP grew by 3.7 per cent at annual rates in the second quarter. The strong growth was higher than most economists expected and suggests the economy has picked up after two quarters of weak growth.
“GDP growth soared past most projections in the second quarter. After two quarters of sluggish growth this suggests the economy is performing significantly better in the second half of this year. However, weak business investment and a deepening US-China trade war could easily derail growth and are likely to keep the Bank of Canada from increasing rates,” says Matthew Stewart, Conference Board of Canada’s Director of Economics.
According to the report’s insights, the strong performance was due to a 13.4 per cent increase in exports.
The growth was broad based with significant increases in exports of energy products, agriculture products, non-metallic minerals and exports of aircraft.
Consumer spending eased to 0.1 per cent. A decline in durables was largely responsible for the softening in consumer spending with a 1.4 per cent decrease in vehicle purchases.
The Conference Board of Canada states that business investment has been very weak in recent years and declined through much of 2018.
In the first quarter of 2019, business investment in machinery and equipment and structures increased by a 13.5 per cent, and was wiped out in the second quarter.
The decrease was due mainly to a 9.3 per cent decline in machinery and equipment investment, largely attributable to a 61.1 per cent decrease in aircraft and other transportation equipment, according to Statistics Canada.
Without stronger business investment the Conference Board of Canada says the country is unlikely to see stronger economic growth.