Cold Weather, Cold Economy—Canada’s Disappointing First Quarter
This winter, have you felt the cold? In reference to the economy, first-quarter activity has been low, to say the least. The bad weather has been blamed for the weak start, but there may be a silver lining: if last year is a clue as to how this year may turn out, then economic growth for upcoming quarters may be plausible.
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The Good, the Bad and the Ugly
So far, Canadian manufacturing and housing starts have been down, while the rate for unemployment has been up. In fact, it’s been stated by various economists that the Bank of Canada’s forecast of a 1.5 percent annualized growth pace may not even be met.
Does this sound like a tune you’ve heard before? Last year, during the first quarter, Canada’s economic growth only expanded by a 1 percent annualized rate. There’s your “bad” and “ugly,” but what about the “good?”
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Due to the presence of the sun and warmer weather, economic growth increased in Canada during the second and third quarters—3.8 percent and 3.2 percent, respectively. Therefore, a repeat in pattern could not only happen, but is also expected.
Blame it on the Cold
As mentioned, the cold has been blamed for such disappointments; this year, temperatures have been even lower. Therefore, as the year progresses (and gets warmer), economists are expecting some progress in growth. Specifically, the second half of the year is believed to rise by 2 percent.
Not only has the cold been factored into the poor economic growth, but the oil impact has also been attributed to the low numbers. However, that hasn’t stopped analysts for predicting a brighter future.
A few factors could aid Canada’s economy in the upcoming quarters, such as the non-energy trade front, the depleted Canadian dollar and the overall hope that history does in fact repeat itself.
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