Tuesday, March 8, 2005

Economic growth slows

THE CANADIAN economy grew at its slowest quarterly pace of 2004 during the final three months of the year as exports slipped and the soaring dollar hurt manufacturing.

Canada’s real gross domestic product increased at an annualized rate of 1.7% in the fourth quarter. In contrast, the United States economy grew at an annualized rate of 3.8%, more than twice the pace of Canada’s.

However, for the year as a whole, output in Canada was up 2.8%, compared with 2.0% in 2003.  Much of the gain came in the second quarter.

The Canadian dollar continued to strengthen vis-à-vis the US greenback, appreciating 7.7% on top of a 12.1% gain in 2003.

While exports rose 4.9%, imports picked up speed, growing a much stronger 8.2%. This led to a significant decline in Canada's trade balance.

Industrial production increased 3.2% last year, more than four times the pace of growth the year before. Manufacturers boosted production 3.9% after a flat 2003.

Despite strong growth in labour income, personal saving continued to plummet, as growth in spending outstripped gains in income. The saving rate last year fell to its lowest level since the 1930s.

Consumer spending

Meanwhile, consumer spending surged 3.5%. Low interest rates continued to stimulate purchases of durable goods, and investment in housing remained robust.

Household borrowing soared to a record $53 billion. As a result, by the fourth quarter, households had $105.80 in debt for every $100 of their disposable income.

Borrowing was led by continued demand for mortgage credit, while consumer credit borrowing remained high.

For more information, contact the information officer (613-951-3640), Income and Expenditure Accounts Division.

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© 2004, 2005 Statistics Canada.