Leading indicator points to modest GDP growth

Canadian economic growth improved to 3.3% annualised in Q4 from 1.8% in Q3. The composite leading indicator points to more modest growth of around 2% annualised over the first-half of this year. Over this period, we expect to see some slowing in consumption growth and outright declines in residential investment. We still anticipate strong growth in business investment, particularly in machinery and equipment. However, net exports will return to being a slight drag on GDP growth, as imports outpace export growth.