First-quarter GDP growth blitz unlikely to be sustained

The recent run of positive economic data suggest that growth in first-quarter GDP could turn out to be as high as 3.0% annualised, stronger than the Bank of Canada’s forecast of 2.5%. The underlying growth drivers, however, still look skewed towards the heavily indebted household sector. With noncommodity exports lagging and business investment missing in action, we aren’t convinced that the economy has turned the corner. Recent data has been more positive and this has led to significant upgrading of first-quarter GDP growth estimates. The underlying growth drivers, however, still look unbalanced. Accordingly, we aren’t convinced that the economy has turned the corner. After severe wild fires disrupted energy production early last year, the economy recovered swiftly and continued to expand at a solid rate throughout the rest of the year.