- Doug Porter , BMO
The Canadian economy expanded at a stronger than expected pace during the last quarter of 2016, supported by consumer spending and lower imports; however, the Central bank is likely to maintain its current monetary policy unchanged. Statistics Canada reported on Thursday that the country's GDP rose at an annualized rate of 2.6% in the Q4 of 2016, surpassing analysts' expectations for a 2% growth rate. Nevertheless, that was slower than the Q3 upwardly revised growth of 3.8%. On a monthly basis, the Canadian economy grew 0.3% in December, following the previous month's upwardly revised expansion of 0.5% and meeting analysts' forecasts. A sharp fall in imports allowed exports, which climbed just 1.3% on an annualized basis, to contribute to economic growth. Furthermore, data showed household consumption advanced 2.6% in the Q4 of 2016, suggesting that the economy fully recovered from the Alberta wildfires that took place in May 2016. However, the strong performance is not expected to change the Bank of Canada's stance. Earlier this week, the Central bank left its key interest rate unchanged at a record low 0.50%.Overall, the Canadian economy expanded 1.4% in 2016, better than expected. After the release, the Canadian Dollar rose markedly against its US counterpart, trading at C$1.3388.
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