Canada's economy grew by 2.1% in Q2, beating forecast

Posted on September 9, 2024   |  

Canada’s economy grew by 2.1% annually in Q2, exceeding both economist forecasts and the central bank’s prediction.

This growth rate, up from 1.8% in Q1, is the fastest since the start of 2023.

Despite the strong GDP growth, falling per-capita GDP and reduced household spending suggest the Bank of Canada might cut rates again this week.

Bond yields rose, with the two-year benchmark reaching 3.33%, and the Canadian dollar strengthened to C$1.349 per US dollar, nearing its best monthly performance this year.

The Bank of Canada had previously lowered its policy rate by 25 basis points in June and July, now at 4.5%.

Key growth drivers in Q2 included an 11% increase in government spending and a 3.5% rise in total investment, excluding inventories.

Household spending slowed to 0.6% annualized, down from over 3% in the prior quarters, while per-capita GDP fell for the fifth consecutive quarter.