Canada: Q1 GDP and BoC in focus this week - NBF

Analysts at National Bank Financial suggest that for the Canadian economy, it’s going to be a busy data week which will feature Q1 GDP on Friday.

Key Quotes

“Trade, is likely to weigh on the headline growth figure judging from monthly reports which showed real imports expanding strongly in the three months to March while real exports slumped. Finally, residential investment was also weak according to construction data and should thus weigh on growth in the quarter. All told, GDP may have expanded 0.9% in annualized terms in Q1.”

“Looking at monthly data, the handoff to Q2 looks very good, with March GDP on pace to expand 0.4% courtesy of gains in the wholesale and retail sectors.”

“Also this week, the Bank of Canada will hold a monetary policy meeting. Uncertainties regarding the global economic outlook are not easing. While it is true that tariffs on Canadian steel and aluminum exports to the US have been eliminated, trade tension between the US and China have taken a turn to the worst recently. Meanwhile inflation is not a threat, with core measures near the BoC’s midpoint of its target range Consequently, we expect the Bank of Canada to stay put and reiterate that an accommodative policy interest rate continues to be warranted. Although no press conference is scheduled following the announcement, a speech set to be delivered by Deputy Governor Carolyn Wilkins on Thursday should provide some valuable insight.”

“On Thursday, balance of payments data for the third quarter could show the current account deficit widening to around C$18.0 billion, led by a deterioration in the goods trade balance.”