A blog about Hamilton and Ontario politics and economy. Or whatever I find interesting.
Monday, March 31, 2014
Canada's Economy Grew 0.5% in January 2014, However First Quarter Overall Only 1.2% Prediction
After a bad December, January GDP growth bounced back at 0.5% according to this Globe and Mail article.
"Canada’s economy grew 0.5 per cent in January, reversing the effects of the December ice storm in Eastern Canada.
The bounce-back was anticipated by economists after a 0.5 per cent contraction in gross domestic product in December, when a winter storm knocked out power to hundreds of thousands of homes and businesses."
"The goods-producing sector led the way in January with gains of 2 per cent for manufacturing and 1.2 per cent for the mining and oil-and-gas sectors, according to a report released Monday by Statistics Canada."
So the fact that manufacturing increased, even more than energy extraction is good news for Ontario which possibly could have had a greater than 0.5% increase in January. Then again the January and February employment numbers for Ontario were totally stagnant which isn't good for GDP growth so who knows. However for the entirety of the first quarter 2014, growth isn't predicted to be good:
"Economists still expect the first quarter to be relatively weak – perhaps a 1.2 per cent annual pace.
That’s well below the Bank of Canada’s official call of a 2.5 per cent GDP gain in the first quarter. And it could force governor Stephen Poloz to lower the banks forecasts in the next monetary policy report, due out April 16."
Considering that Ontario's population growth is around 1% per year, 1.2% GDP growth would be pretty piss poor for Ontario, as that means that GDP growth per capita would be near zero. It is also bad for the current 2013-2014 budget, as the fiscal year ends at the end of the first quarter. With expenses rising and little GDP growth, expect the previous deficit prediction for Ontario for the ongoing fiscal year to rise. Also if growth is only 1.2% in Ontario in the first quarter, one would have to think the mandarins at the Ontario Finance Ministry would have to ratchet down predictions of GDP growth and tax revenues for this coming year's budget and future years. An already interesting budget is going to become more interesting.