The experts promised us a “barnburner” of a first quarter for Canada’s economy, and the economy delivered.
Canada’s GDP grew at a 3.7-per-cent pace in the first three months of 2017, more than tripling the U.S.’s 1.2-per-cent pace, StatsCan reported on Wednesday.
"Wasn't it America that was supposed to be made great again? And yet boring old Canada was a first quarter pace of growth that more than tripled what was seen for the U.S. ," commented TD Bank senior economist Brian DePratto.
DePratto noted that, with this quarter's results, Canada has seen the fastest pace of economic expansion since 2010, when the country was recovering from the global financial crisis.
Household spending was one of the largest contributors to growth this quarter, increasing at a 4.3-per-cent pace. Auto sales were particularly strong.
But, as CIBC economist Avery Shenfeld noted, consumers’ savings dropped at the same time, suggesting Canadians spent their savings and went further into debt to consume this quarter — a reality that can’t continue forever.
Canada’s housing boom, which seems to be on shaky ground lately, was also a major contributor. Business investment in housing grew at a 3.7-per-cent pace, more than double the 1.5-per-cent rate in the last quarter of 2016.
If there was bad news to be found in the report, it was in exports, which slid 0.1 per cent on the back of a 0.5-per-cent decline in service exports.
However, most analysts expect the current rapid pace of economic growth to slow in the coming quarters.
A new forecast from ratings agency Moody's predicts Canada's growth for all of 2017 will come in at around 2.2 per cent, behind the U.S. and second-best among G7 countries.
The “modest pace" of global economic expansion "should continue barring a negative move toward increased protectionism in the U.S.,” Moody’s said.