Gross Domestic Product rose for the 10th consecutive time in March, rising 0.5%, according to Canadian statistics on Friday. In February, the economy grew faster than expected by 1.1%, the agency said. Preliminary figures suggest an increase of about 5.6 percent year-on-year in the first quarter, which would exceed most forecasts. The report highlights the amazing resilience of the Canadian economy despite COVID-19 restrictions designed to limit the spread of the Omicron variant and its rapid recovery as authorities eased lockdowns in February and March. The economy is on a growth trajectory almost double the Bank of Canada’s latest forecast for the first quarter, which it forecast at 3 percent year-on-year just two weeks ago. Central Bank officials estimate that the country was already at full capacity at the end of last year, as the economy grew at a strong annual rate of 6.7% in the fourth quarter. Friday’s report will boost expectations for more aggressive Bank of Canada interest rate hikes in the coming months. The Canadian dollar showed a slight change, maintaining gains of 0.5 percent per day at $ 1,274 per US dollar at 8:45 a.m. in Toronto transactions. Investors in overnight exchanges are fully pricing an increase of 50 basis points in the next policy decision on June 1, followed by a series of additional increases that will raise the benchmark interest rate by up to 3 percent by the end of this year. As of early March, the Bank of Canada raised its overnight interest rate to 1 percent from the low of 0.25 percent set when COVID-19 struck North America. “The Bank of Canada set the table for a 50 bp increase in June, but data like this will have market prices with at least some chance that central bankers need to move more aggressively,” said Royce Mendes, chief macroeconomic strategist at Desjardins Securities Inc. ., refers to a report to investors. The figures also confirm expectations that Canada’s expansion will outgrow growth in many advanced economies this year, in part because the country will not be adversely affected by the Ukraine crisis thanks to the country’s commodity sector. The US economy shrank in the first quarter, according to preliminary estimates by the Commerce Department on Thursday. In Canada, February earnings were the fastest since March 2021, also a month after the lockdown. Increased activity was widespread, with services-related sectors up 0.9 percent and commodity producers up 1.5 percent. Of the 20 sectors monitored by the Statistics Canada, 16 have increased. Accommodation and food increased by 15 percent as authorities lifted the restrictions. For the March preliminary estimate, the agency said customer-facing industries led to growth, with manufacturing and construction also expanding.
