Canada Reports Weakest Back-to-Back Quarters of GDP Growth Since 2015

Canadian Economy Continues to Show Signs of Weakness

The Canadian economy continues to show signs of weakness. Statistics Canada reported that the Canadian gross domestic product (GDP) advanced just 0.4% in the first quarter of 2019. In the fourth quarter of 2018, the Canadian economy expanded a paltry 0.3%. While the Bank of Canada predicts the economy will pick up in the second quarter, those expectations could be based on faulty assumptions.

Statistics Canada announced recently that the country’s economy expanded just 0.4% on an annualized basis, in the first quarter. In the fourth quarter of 2018, Canada’s economy slowed to just 0.3%.1

In 2018, Canada’s GDP expanded a measly 1.8%; in 2017, GDP was 3%. Despite a new budget and raft of federal spending, the Canadian economy is not showing signs of growth. This represents the weakest back-to-back quarters of growth since 2015.

Statistics Canada said the country’s economic headwinds came from weakness in net trade, with imports increasing 1.9% and exports dropping 1%. It was the first quarterly decrease since 2017. Exports of farm and fishing products fell 9.5% and crude oil shipments dropped 2.8%.

There is, according to Statistics Canada, a bright side. GDP growth, no matter how slight, was fuelled by household spending and business investment. Both of which are expected to help boost Canada’s GDP throughout the rest of the year.

There are some issues with that assumption, however. First, consumer spending may be up, but much of that spending is being backed by credit cards. Canadian household debt is at record levels and more and more Canadians are unable to make ends meet with 53% of Canadians living paycheque to paycheque.2 It’s going to be tough to expect debt saddled Canadians to help boost GDP.

Second, there are fears that Canadian GDP could take a hit from a trade war between the U.S and China and Mexico. Canadian GDP is also being dragged down by lower oil prices. A full blown trade war would hurt Canadian investments and exports. Moreover, because of U.S. tariff threats with Mexico, the chances of a new trade deal between Canada, Mexico, and U.S being ratified this year is pretty remote. That will deal the Canadian economy another blow.

While the Bank of Canada is expected to leave its benchmark interest rate unchanged, underwhelming GDP data from Statistics Canada means governor Stephen Poloz could actually reduce its lending rate. Which would also be bad for the Canadian dollar.

Learn-To-Trade.com, Canada’s Leader in Stock Market Trading Courses

The Canadian economy continues to show signs of weakness and despite assurances, there remain serious downside risks to both Canada’s GDP growth outlook and the global economy. No matter what the broader markets are doing though, the trading professionals at Learn-To-Trade.com can teach you how to trade more confidently and profit more consistently.

As Canada’s oldest and leading provider of stock market trading courses, the instructors at Learn-To-Trade.com provide investors with the skills necessary to conduct a comprehensive technical and fundamental analysis on any stock, read economic cycles, and spot market trends. You’ll also learn about stock index trading, foreign markets, commodities & futures trading, forex trading, how to trade bitcoin and other cryptocurrencies, and about risk management and capital preservation.

At Learn-To-Trade.com, we understand that investors have different needs, that’s why we provide a unique, Lifetime Membership that allows you to re-attend any part of the program as often as you’d like.

To learn more about Learn-To-Trade.com’s stock market trading course, contact us at 416-510-5560 or by e-mail at info@learn-to-trade.com.

Sources:

  1. “Gross domestic product, income and expenditure, first quarter 2019,” Statistics Canada, May 31, 2019; https://www150.statcan.gc.ca/n1/daily-quotidien/190531/dq190531a-eng.htm.
  2. “Credit in Canada,” Refresh Financial, January 2019; https://refreshfinancial.ca/wp-content/themes/refresh/images/bankruptcy/pdf-guide/CreditInCanada_guide.pdf.

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George Karpouzis is the co-founder of Learn-to-Trade and has been personally providing education and mentoring to over 3000 members since 1999. George has been trading in the stocks, options, futures and forex markets using technical analysis since 1986. With the help of advancements in trading technology the Learn To Trade program is now accessible worldwide. His background and passion for teaching brings an invaluable asset to our members. George is constantly striving to improve the program content and develop new strategic relationships for the benefit of the members. Add me to your G+

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