Canada's economy outperforming U.S.
Flaherty says modest growth reinforces Canada 'is on the right economic track'
Posted: Aug 31, 2012 9:08 AM ET
Last Updated: Aug 31, 2012 1:16 PM ET
Canada's economy expanded at a 1.8 per cent annual pace during the last quarter, the same growth seen at the start of the year and slightly better than what economists were expecting.
Statistics Canada said Friday that an increase in business investment was the biggest factor contributing to growth.
Economists had been expecting a 1.6 per cent gain. The Bank of Canada, however, had been forecasting the 1.8 per cent gain that came to be. For comparison purposes, the U.S. economy expanded at a 1.7 per cent annual pace during the same period.
Speaking to reporters in Toronto, Finance Minister Jim Flaherty said he was encouraged by the showing.
'This is something we'd like to see more of'—Jim Flaherty on business investment
"While the growth is modest, it reinforces that Canada is on the right economic track compared to other countries," Flaherty said.
He was especially heartened by the uptick in business investment, since it shows the private sector has renewed confidence and is starting to drive expansion.
"This is something we'd like to see more of," he said.
Getting businesses to invest in themselves is something Flaherty and other policymakers such as Mark Carney at the Bank of Canada have been eager to see happen.
Just last week, Carney noted that Canadian businesses are currently sitting on record amounts of cash. That's great for their balance sheets, but from a macroeconomic perspective, that's "dead money," he said.
"Their job is to put money to work and if they can’t think of what to do with it, they should give it back to their shareholders," Carney said.
The uptick in business investment is a sign they might be starting to do that.
Still, other private sector economists were not as impressed.
"Even though Canada's economy was just able to eke out a higher gain in output than the US in the second quarter, the pace is still considered slow," IHS economist Arlene Kish said in a note to clients.
"The economy is performing as expected by the Bank of Canada, but given what is unfolding on the world stage with the eurozone crisis and sluggish U.S. growth, Canada's economy will be hard-pressed to surpass the current rate of growth, without a major injection of optimism."
Latest Ottawa News Headlines
- Hutt changed story, said he burned wife accidentally
- A man accused of scalding his wife and leaving her to die changed his story about how his wife was burned during a police interrogation, an Ottawa court heard today. more »
- Torch relay kicks off Ottawa Race Weekend
- Torchbearers carried the flame to Ottawa all the way from Marathon, Ont., on Thursday to help officially kick off Ottawa Race Weekend. more »
- Mike Duffy says he wants to give Canadians 'the whole story'
- Senator Mike Duffy says he wants a "full and open" inquiry so Canadians can get all the facts about the scandal that has rocked the Senate and the Prime Minister's Office and that he has no plans to resign. more »
- Wharnsby: Never count out Paul MacLean
- CBC Sports senior hockey writer Tim Wharnsby explains why it would be unwise to write off head coach Paul MacLean and his pesky Ottawa Senators just yet. more »
Top News Headlines
- Rob Ford councillors set to take over if mayor steps down
- Members of Rob Ford's executive committee say they are prepared to take over the day-to-day running of the city of the Toronto mayor is no longer able to perform his duties amid a scandal involving allegations he was caught on video smoking crack cocaine. more »
- Greg Weston: Senate scandal may be Harper's worst hour
- The widening Senate scandal that the prime minister flippantly tried to dismiss as a 'distraction' just days ago has instead become arguably Stephen Harper's worst hour. more »
- Washington state bridge collapse injures 3
- A Washington state bridge over a river collapsed last night, dumping two vehicles into the water and sparking a rescue effort by boats and divers who searched the chilly waterway north of Seattle. more »
- 3D printers give rise to 'desktop manufacturing'
- Customizable objects from plastic dollhouse furniture to medical prosthetics can now be designed and printed out by almost anyone at the press of a button, and is going to lead to an 'explosion of new stuff,' predicts author Chris Anderson. more »
- Rob Ford fired chief of staff for telling mayor to 'get help'
- CBC News has learned the details of what precipitated the firing of Mark Towhey as Toronto Mayor Rob Ford's chief of staff — and it was advice from Towhey that Ford needs to 'get help.' more »
- Hutt changed story, said he flung hot water at wife accidentally
- The Ottawa Senators love their dogs
- Fire destroys 100-year-old barn near Kemptville, Ont.
- Orleans man dies from stabbing injuries
- Finding inspiration for the Sens
- Alleged Ford crack video seller not responding to calls
- Woman pleads for help after daughter kidnapped in Haiti
- Senators' Alfredsson on defeating Penguins: 'Probably not'
- Stabbing victim not expected to live, family says