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Canadian economy grows 2.6 per cent, beats expectations in the last stretch of 2016

A drop in imports in the last three months of 2016 helped boost Canada's GDP numbers past economists' expectations.
A drop in imports in the last three months of 2016 helped boost Canada's GDP numbers past economists' expectations. Andrew Vaughan/CP

The Canadian economy grew at a faster pace than expected in the final quarter of last year, lifted by consumer spending and a rebound in activity in the housing market, while imports tumbled, data from Statistics Canada showed on Thursday.

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Gross domestic product grew at an annualized 2.6 percent in the fourth quarter, beating economists’ forecasts for 2.0 percent. Still, that marked a slowdown from an upwardly revised 3.8 percent in the third quarter as the economy recovered from the impact of wildfires in Alberta earlier last year.

An increase in net trade contributed to the fourth quarter’s performance as imports tumbled, giving back gains seen in the third quarter due to one-time factors related to an east coast oil project.

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Household consumption also drove growth in the fourth quarter, climbing an annualized 2.6 percent as consumers continued to spend.

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Business investment in residential structures rose by 4.8 percent after declining in the previous two quarters on an increase in spending on new construction. Consumer spending and the housing market have been key pillars of the economy in recent years, spurring concerns Canadians are taking on too much debt.

Higher shipments of crude oil and bitumen helped exports rise 1.3 percent, though that still marked a slowdown from the sector’s strong third-quarter performance. Imports slumped 13.5 percent after being boosted in the third quarter by the import of a module for the offshore Hebron oil project.