Canada growth preview: Oil to weigh on October figure – ING

Jonas Goltermann, developed market economist at ING, explains that the pace of Canadian growth unexpectedly slowed in September and brought a pretty disappointing end to the third quarter, as the economy grew only 2.0%.

Key Quotes

“Things look slightly better for October though; we’re forecasting +0.1% month-on-month. This should see an annual figure of 2.1%, which supports our view that Canada will undergo a mild slowdown next year.”

“Though our October forecast is still for decent growth, it could be better if it weren’t for transportation constraints and inventory build-ups in Canada’s oil industry weighing on both oil extraction and exports. A glimpse of this can be seen in Canada’s trade data: The trade deficit widened to CAD1.17 billion in October - largely driven by a 1.2% fall in exports.”

“Our 2018 growth estimate has been revised down to 2.5% due to a worse-than-expected third quarter, but don’t let that take the shine off things. This print is still solid, and with the central bank’s three main core inflation measures still averaging 1.9% in November, the Bank of Canada will likely carry on tightening policy rates throughout next year.”