Cheap Oil Feared to Disturb Strong Canada Third Quarter GDP

This article was last updated on April 16, 2022

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Recent data has indicated that Canada’s economy grew faster than expected in the third quarter, although cheaper oil prices are increasing the likelihood that the Bank of Canada will avoid reconsidering higher interest rates anytime soon despite the recent improvement in figures. The third quarter growth topped 2.8 percent, and surpassed 2.1 percent market forecast and the 2.3 percent estimate of Bank of Canada, following 3.6 percent in the second quarter.

According to Bank of Montreal chief economist, Doug Porter, the growing number of jobs, auto sales, home sales, and inflation has placed the economy in “a very good place heading into the energy price storm.” However it was added that “does it get any better than this? Sadly, probably not. Even with this nice run, we suspect the Bank of Canada will be completely unmoved because of one word – oil,” while pointing towards pending impact on government revenues, consumer prices and growth from weak oil prices. As of Friday, Brent crude oil settled at $73 a barrel after hitting a fresh four-year low in light of OPEC’s decision not to cut output, which is a move anticipated by investors to leave oil markets heavily oversupplied.

Consequently, The Bank of Canada is expected to keep interest rates on hold next Wednesday and instead concentrate over how Governor Stephen Poloz interprets the recent data. Quite noticeably, Canada’s growth in real gross domestic product is less than expected 3.9 percent in the United States for the quarter, but U.S. strength spilled over the border, as Canadian goods exports rose by an annualized 9 percent.

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1 Comment

  1. High fuel costs meant high food costs. Low fuel costs SHOULD mean low food costs. I’m STILL waiting for the food costs to go down.. Looks like harper still has his zit, that sits on his shoulders, still buried waay up his axx !!!!

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