Numbers recently published on Statistics Canada’s online database showed that between 2014 and 2016, the nation’s economy generated $24 billion more output in nominal terms than first estimated.
In real terms – which adjust the numbers for inflation and are the more conventional marker of economic activity – the update showed Canada’s growth rate over the three-year period averaged 1.8%, compared with a previous estimate of 1.7%.
The revisions may suggest to Bank of Canada policy makers there’s even less slack in the economy than currently assumed, which could have implications for interest rates. They also revealed an economy with a better mix of economic activity, since the changes were driven by greater-than-expected business investment, mainly construction-related.
“The hit to the economy from the oil price shock was not as severe as initially estimated,” Macdonald-Laurier research analyst Philip Cross told Bloomberg.
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The update is part of annual revisions of GDP figures, and the changes aren’t very large by historical standards, particularly given the shock to the economy, Cross said. “The potential was there for a much bigger revision.”
Even with the upward revisions, the data still illustrated an economy that went through tough times as oil prices plunged. The 1.2% average growth rate in 2015 and 2016 remains the slowest two-year pace outside a recession in at least six decades.
The economic slump that began at the end of 2014 became an important campaign issue during the 2015 election that saw the Conservatives under Stephen Harper lose power to Prime Minister Justin Trudeau’s Liberals.
In the middle of the campaign, the statistics agency reported GDP declined in the first two quarters of 2015, providing fodder for opposition leaders who claimed the economy had fallen into a recession.
The agency’s fully revised data will be officially released later this week on December 1, along with a report on third quarter 2017 gross domestic product.
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