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Canadian GDP Shrinks 3.4 % in Q4 on an Annualized Basis

in response to

Re: P_DAC

Oracle

posted on Mar 02, 2009 04:33AM

The story from The Globe & Mail follows.

In Q4 (on an annulaized basis), GDP reductions are as follows:

Japan: 12.7%

US: 6.2%

Eurozone: 5.9%

Canada: 3.4%

And our dollar and stock markets take a bigger hit than the US? This shows just how out of whack the markets really are. We should have a strengthening dollar and a stock market that falls less than the US market. Seems like Niall Ferguson (The Ascent of Money) was right...the epicentre of the current financial crises started in the US housing market, but the US's trading partners will probably bear a greater burden of the fallout in the short term. However, he also predicts that in the mid to long term, inflation will wreak havoc on the US dollar, due to the enormous bailouts being handed out.

Trainboy

KEVIN CARMICHAEL AND VIRGINIA GALT

Globe and Mail Update

March 2, 2009 at 9:09 AM EST

OTTAWA — Canada's economic growth cratered in the fourth quarter, as the global recession starved exporters of markets and deterred wary consumers from spending at their usual pace.

Gross domestic product contracted at an annual rate of 3.4 per cent over the final three months of the year, the biggest decline since 1991, Statistics Canada reported Monday.

Exports fell 4.7 per cent, the sixth consecutive quarterly drop, which represents the longest slump in more than 60 years of records, StatsCan said.

Household spending decreased 0.8 per cent, as shoppers reduced their spending for the first time in a quarter since 1995.

FromThe collapse in economic growth increases the likelihood that the Bank of Canada will cut its benchmark lending rate at a scheduled announcement tomorrow. The central bank's key target for overnight loans between banks currently is 1 per cent, the lowest ever.

Last month, the Bank of Canada said it expected the economy would decline at an annual rate of 2.3 per cent in the fourth quarter. Economists surveyed by Bloomberg News were predicting a contraction of 3.6 per cent in the fourth quarter.

In December alone Canada's economy shrank 1 per cent, the most since 1982, StatsCan said.

Over the entirety of 2008, Canada's GDP expanded 0.5 per cent, the least since 1991 and down from 2.7 per cent in 2007.

The Canadian dollar was down more than half a cent after the GDP release, trading at 77.98 cents (U.S.), a drop of 0.62 of a cent from Friday's close. This followed a drop of 1.7 per cent in the loonie's value late last week. Economists and currency strategists said Monday that Canada's bad economic news had already into the currency rate to some extent.

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