Canada’s Economy Expands in Consecutive Months

GDP increases by 0.3% in July due to increases the manufacturing, trade and transportation sectors

By: Khristopher Reardon

Via alexindigo, flickr

A release by Statistics Canada has people easing their recession worries as numbers show the Canadian economy has grown over the summer.

Statistics Canada reported that the Gross Domestic Product (GDP) grew 0.2% in June followed by a 0.3% increase in July, showing increases in manufacturing, wholesale trade and transportation services, though construction numbers have declined over a weaker housing market.

“The July gain builds in annualized growth of 1.3 per cent for all of the third quarter, heavily reducing the risk that Canada has somehow stumbled into a technical recession ahead of the rest of the world,” Douglas Porter, BMO Capital Markets economist, told the Toronto Star.

The gains have cast a little hope for Canadians worried about another recession.

“While this report largely predates the onset of serious financial market turbulence — which began in earnest in late July — it does suggest the Canadian economy had some decent momentum heading into the turmoil,” said Porter.

Recent economic turmoil has caused a lot of Canadians to steel themselves against another economic decline. Greece is teetering on the edge of financial oblivion at the risk of not being able to pay off its debts, and the US is bracing itself through its financial and political tremors. This has caused a lot of instability in the stock and currency markets and is raising fears that a recession may be on its way.

 “Overall, a healthy gain — although recent indicators suggest some potential deceleration in the following months, which should leave third-quarter GDP at around two per cent annualized,” writes Emanuella Enenajor, CIBC World Markets Economist.

However, other economists are predicting a rough patch for Canadian markets.

As people take money away from commodities and put them into currency and US bond, our commodities market will suffer. Patricia Mohr, economics vice-president and commodity market specialist at Scotiabank, said to the Vancouver Sun that fearful global markets have been dragging Canadian commodity prices down for the last two months and she expects this to continue.

 “51.7 per cent of our exports are in commodities or resource-based manufactured goods. So yes, if you have lower prices for a time, it will push down our trade balance — the value of our exports,” said Mohr. “China’s economy — of vital importance to global commodity markets — also appears to be slowing, leading to some unwinding of commodity positions by financial institutions.”

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