Canada first-quarter economic growth leaps to 3.7%

Canada's economy roared back to life in the first three months of this year, as more business and household spending pushed growth to 3.7 percent, the government's statistical agency announced Wednesday.

The gross domestic product (GDP) was in line with expectations after an annualized 2.7 percent uptick in the final months of 2016 -- placing Canada's growth ahead of its G7 peers.

By comparison, US GDP grew 1.2 percent in the quarter.

Purchases of passengers cars and trucks led the increase in consumer spending, according to Statistics Canada.

Spending on housing, water, electricity, gas and other fuels, recreation and culture, and clothing and footwear also increased, the agency said.

Housing growth was largely due to strong resale activity in the Toronto area, as well as more home renovations.

Business investment in equipment and machinery, meanwhile, rebounded following declines in four of the previous five quarters.

The increased investment was concentrated in industrial machinery and equipment, computers, and medium and heavy trucks, buses and other vehicles.

Mineral exploration also rose sharply following eight consecutive quarters of decline, as oil and gas activity picked up.

However, exports edged down.

Although the data signaled an end to a long period of stagnant growth, the International Monetary Fund (IMF) raised concerns about the "durability of the Canadian recovery."

It noted the rise in Canadian consumer spending in a report Wednesday but said business investment remained relatively weak.

Non-energy exports, meanwhile, continue to "underperform" and housing imbalances have risen, the IMF said.

The IMF upped its 2017 growth forecast for Canada to 2.5 percent (from 1.9 percent), followed by 1.9 percent in 2018 (from 2.0 percent).

But it said: "Canada's traditional engines of growth have slowed, hobbled by longstanding structural problems of low labor productivity growth and population aging that have affected the ability of Canadian firms to compete globally and create jobs."

Although a Can$1.5 trillion (US$1.1 trillion) mortgage market has buoyed private consumption, soaring real estate prices have left many homeowners highly indebted while pricing many would-be first-time buyers out of the market.

That has become a "social issue," the IMF said, warning that a sharp correction in the housing market could trigger an economic downturn.

Global trade uncertainty could also have "significant consequences" for Canada, it said.

© 2017 AFP