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Yahoo
3 days ago
- Business
- Yahoo
Canada's economy grows by 2.2% annualized rate in first quarter
TORONTO (Reuters) -Canada's economy grew faster than expected in the first quarter, expanding by a 2.2% annualized rate, data showed on Friday. Market reaction: CAD/ LINK: COMMENTS ANDREW GRANTHAM, SENIOR ECONOMIST, CIBC CAPITAL MARKETS "While headline GDP growth was solid in Q1, it was flattered by a surge in exports as companies looked to front-run potential US tariffs. Domestic demand was weak during the quarter, and monthly data point towards only slight upward momentum heading into Q2." "Early tracking for Q2 - assuming flat readings for May and June - points towards modest growth of 0.5% annualized. While that would clearly be below the economy's long-run potential, suggesting that slack is building up again, it would be better than the Bank of Canada's April MPR (Monetary Policy Report) scenarios." DOUG PORTER, CHIEF ECONOMIST, BMO CAPITAL MARKETS "I think the bottom line here is the economy held up better than most most had expected. We were looking for a decent first quarter but it was better than decent." "On top of that, and maybe the biggest surprise of all today, is the early reading on April is for a small gain following a similar size one-tenth (of a percentage point) increase in March. That's frankly quite impressive." "We can take out the details of the first quarter numbers - they're not nearly as strong as the headline would suggest. But still the overall number is nevertheless important here. There's no real sign of distress in the economy from the GDP figures and I think that's the most important message." "I think this heavily reduces the chances of the Bank of Canada cutting next week." ANDREW KELVIN, HEAD OF CANADIAN AND GLOBAL RATE STRATEGY AT TD SECURITIES "I would say the Q1 numbers being a little bit better than expected is a positive development. Some people may focus on that final domestic demand was effectively flat but a lot of that was due to softer government spending. We did see positive business investment and I think that is really important because that was a category we were looking at to suffer in particular due to uncertainty on the trade front." "We're not yet seeing the signs of a material hit to activity due to trade tensions and for that reason, I think it should be regarded as a positive surprise." "On the basis of the GDP data, it's difficult to make the case for a rate cut in June." "Looking forward, we still expect the economy to show some degree of weakness in the middle part of this year. We still look for growth to be essentially flat for Q2 and Q3, which we think will require additional policy easing from the Bank of Canada."
Yahoo
3 days ago
- Business
- Yahoo
Canada's economy charged ahead in the first quarter of 2025 as exporters sought to get ahead of tariffs
Canada's economy grew 2.2 per cent in the first quarter of 2025, Statistics Canada said on Friday. That maintained the pace recorded in the final quarter of last year and significantly exceeded estimates. In a note following the data release, CIBC economist Andrew Grantham cautioned that while real gross domestic product (GDP) growth was "solid," the number was "flattered by a surge in exports as companies looked to front-run potential US tariffs." Economists had expected the economy to grow 1.5 per cent on an annualized basis in the first quarter, according to consensus estimates published by RBC Economics. Grantham noted "weak" domestic demand in the quarter, with "only slight upward momentum heading into Q2." Real gross domestic product (GDP) increased 0.1 per cent in March, matching expectations. The quarterly growth came in above the Bank of Canada's forecasts. The central bank expected real GDP to grow 1.8 per cent on a quarterly annualized basis, according to its latest Monetary Policy Report (MPR). The Friday data also include a revision to fourth quarter 2024 growth, which at the time came in above expectations, adjusting the figure from 2.6 per cent to 2.1 per cent. This story will be updated. John MacFarlane is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jmacf. Download the Yahoo Finance app, available for Apple and Android.
Yahoo
3 days ago
- Business
- Yahoo
Canada's economy grew 2.2 per cent in the first quarter of 2025: Statistics Canada
Canada's economy grew 2.2 per cent in the first quarter of 2025, Statistics Canada said on Friday, maintaining the pace recorded in the final quarter of last year. Economists had expected the economy to grow 1.5 per cent on an annualized basis in the first quarter, according to consensus estimates published by RBC Economics. Real gross domestic product (GDP) increased 0.1 per cent in March, matching expectations. The quarterly growth came in above the Bank of Canada's forecasts. The central bank expected real GDP to grow 1.8 per cent on a quarterly annualized basis, according to its latest Monetary Policy Report (MPR). The Friday data follow fourth quarter 2024 results that came in above expectations, driven by higher spending and increased business investment and exports. This story will be updated. John MacFarlane is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jmacf. Download the Yahoo Finance app, available for Apple and Android. Sign in to access your portfolio
Yahoo
21-05-2025
- Business
- Yahoo
Macquarie expects BoC rate cut delay on sticky core inflation
-- Macquarie economist David Doyle now expects the Bank of Canada to begin cutting interest rates in July, rather than June, reflecting stubborn core inflation in April's CPI report. 'These firm data lead us to push out the timing of our next expected cut to July,' Doyle wrote in a note to clients on Tuesday. While headline inflation slowed to 1.7% year-over-year and declined 0.2% on the month, helped by energy prices and the removal of the carbon tax, core measures told a different story. The average of trimmed mean and median CPI accelerated to 3.15% year-over-year, the highest reading since March 2024. 'This was the strongest result since December,' Doyle noted, pointing to the 0.37% monthly increase in core measures as evidence the BoC will want more clarity before moving. Following the data, market-implied odds of a June cut fell from 68% to around 30%. Macquarie still sees 75 basis points of easing from the BoC by year-end, but Doyle believes the central bank will now wait for the updated July Monetary Policy Report before making its next move. 'In our view, the BoC is likely to await more data and assess the outlook with a new MPR forecast in July,' he said. Doyle also highlighted a mix of inflation dynamics: food prices were up 0.5% month-over-month, while shelter inflation remained steady at 0.2%, supported by a 0.7% uptick in rent. He expects overall inflation to moderate unevenly in the months ahead, citing slowing wage growth and rising unemployment, now at 6.9%. Durable goods inflation reaccelerated, while semi-durables fell, and travel services saw a typical post-March rebound. Doyle flagged the potential for tariffs to keep pressure on goods prices, writing that 'upward momentum' may persist despite recent moderation in Canada's retaliatory trade response. Related articles Macquarie expects BoC rate cut delay on sticky core inflation Large U.S. Treasury holders in Asia saying "no" to "sell America" trade - Yardeni Retail earnings ahead, Nvidia CEO on U.S. chip controls - what's moving markets Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Al-Ahram Weekly
21-05-2025
- Business
- Al-Ahram Weekly
Interest rate cuts on the horizon? - Economy - Al-Ahram Weekly
Experts have been speculating about whether the Central Bank of Egypt's Monetary Policy Committee will cut interest rates at its meeting this week Inflation in Egypt is forecast to average around 14 to 15 per cent and 10 to 12.5 per cent in the calendar years 2025 and 2026, respectively, compared to 28.3 per cent in 2024, according to the Central Bank of Egypt's (CBE) quarterly Monetary Policy Report. The report, relaunched on Monday after a couple of years of hiatus, is part of the CBE's efforts to implement an inflation-targeting framework and enhance its policy transparency. It serves as the primary tool for explaining the rationale behind monetary policy decisions. According to the report, headline inflation is expected to continue declining throughout the remainder of 2025 and 2026, albeit at a slower pace compared to the significant decline witnessed in the first quarter of 2025. 'The slower disinflation path is partially due to the drag from implemented and planned fiscal consolidation measures across the forecast horizon, in addition to the relative persistence of non-food inflation,' the report said. All things being equal, inflation is expected to converge towards the CBE's target band of five to nine per cent on average in the fourth quarter of 2026, it added. The report was published at a time when experts are speculating about what the Monetary Policy Committee (MPC) will decide regarding interest rates at its meeting on 22 May. The MPC had cut the overnight deposit rate, overnight lending rate, and the rate of main operations by 225 basis points (bsp) (2.25 per cent) to 25 per cent, 26 per cent, and 25.5 per cent, respectively, at its last meeting on 17 April. 'We expect the MPC to cut interest rates by 200 basis points (two per cent)… mainly to stimulate economic growth, given the relative stability in the domestic and international economic conditions compared to the previous month,' financial analyst and economist at HC Securities Heba Monir wrote in a note on Monday. 'The Egyptian economy was able to contain the inflationary pressures… our carry trade is still attractive, and there is a noticeable improvement in the Net Foreign Assets [NFA] position of the banking sector, facilitating foreign exchange liquidity and availability,' Monir wrote. On a similar note, Aya Zoheir, head of research at Zilla Capital, was quoted as saying that the MPC is likely to cut interest rates by 100 basis points (one per cent). She said that there are clear signals from the US Federal Reserve towards starting to lower interest rates in the near future, and major central banks like the European Central Bank and the Bank of England have already taken steps in this direction, which eases pressures on emerging markets. According to Zoheir, high interest rates have become a burden on growth, and they also contribute to creating inflationary pressures. Referring to the MPC's decision to cut interest rates by 225 basis points on 17 April, she said it was unusual for an easing cycle to begin and then stop without clear justification, which could confuse the markets and raise questions about the consistency of the monetary policy direction. Before cutting rates on 17 April, the MPC had hiked rates by a total of 1,900 bps (19 per cent) since it started its tightening policy in 2022. An analyst interviewed by Al-Ahram Weekly did not believe a rate cut is in order, however. He said that on a monthly basis, aside from the drop in food inflation, everything else had increased in price. In his calculation, after discounting items such as education and cigarettes, which do not experience regular hikes, the monthly inflation rate in April was the highest since February 2024 at 3.5 per cent. He believes that with an unfavourable base effect, since May last year saw cooler inflation, the annual rate is likely to accelerate. He is expecting a pause by the MPC and a resumption of monetary easing at its July meeting. On an annual basis, urban headline CPI (consumer price) inflation recorded 13.9 per cent in April 2025 compared with 13.6 per cent in March 2025. Jihad Azour, director of the Middle East and Central Asia Department at the International Monetary Fund (IMF), said in an interview in late April that any further reductions in interest rates should be approached with caution. It was important to be vigilant in managing monetary policy in the light of the current shocks, Azour said, adding that the IMF sees risks of a return of inflation and therefore advises that it is necessary to maintain a policy that leads to reducing inflation to stable single-digit levels. What is important, the analyst who spoke to the Weekly said, was that the easing cycle has begun. The fact that there are differences about when it will happen should not be an issue, he added. He sees the MPC cutting 900 basis points (nine per cent) off interest rates before the end of the year and between 500 and 600 basis points (five to six per cent) next year. The MPC meeting coincides with a visit by an IMF mission for the fifth review of Egypt's $8 billion Extended Fund Facility (EFF) loan agreement. Nigel Clarke, IMF deputy managing director, was also in town for a two-day visit. Clarke met with Prime Minister Mustafa Madbouli, the governor of the CBE, and the finance minister and participated in the inaugural IMF Middle Eastern and North Africa (MENA) Research Conference at the American University of Cairo to discuss policy priorities for the region. He also took part in a forum organised by the Lynx Strategic Business Advisors Forum, where he met with senior business executives. According to the analyst, the IMF mission is likely to focus on three main issues during the fifth review: boosting private-sector participation in the economy; mobilising revenues from sources such as the Value Added Tax (VAT); and progress on the sale of stakes in state-owned enterprises. In a statement following the IMF board of director's completion of Egypt's earlier fourth review, the IMF pointed to the need to take 'decisive measures to re-start divestment efforts, firmly reduce the state's footprint, and level the playing field.' It also highlighted the importance of 'broadening the tax base, streamlining tax incentives, and enhancing compliance' to create the fiscal space for priority development and social needs. Ahmed Kouchouk, Egypt's minister of finance, confirmed during his meeting with Clarke the government's 'commitment to continue adopting polices and reforms that enhance the role of the private sector along with the competitiveness of our economy, that build trust and partnership with our taxpayers in our sincere efforts to widen the tax base, that reduce the non-tax burden on investors, that bring down the debt-to-GDP ratio along with debt-service bill, and that create adequate space for additional targeted social and human capital spending.' He noted that Egypt's GDP growth reached 3.9 per cent during the first half of the year, driven by strong private-sector activities. He also said that tax revenues were growing by 38.4 per cent, the highest rate recorded in decades. He reiterated his commitment to cutting public debt, saying that 'we expect our budget sector debt to continue to decline as a percentage of GDP to reach 85 per cent by June 2025, down from 96 per cent in June 2023.' * A version of this article appears in print in the 22 May, 2025 edition of Al-Ahram Weekly Follow us on: Facebook Instagram Whatsapp Short link:
