Canada’s GDP Drops 3.4% in Q4 from Last Year

(The Canadian Press)

Canada’s economy shrank by 3.4% cent in the fourth quarter from the same period a year before. That compares with a 6.2% decline in the U.S. economy during the same period, a 5.9% drop in the European Union and a 12.7% plunge in Japan.

Canada’s gross domestic product declined 0.8% from the previous quarter, weakening progressively each month for the sharpest quarterly decline since 1991. Statistics Canada reports declines in exports, capital investment and personal expenditures all contributed to the economic contraction.

The agency says the GDP declined one per cent in December from the month previous. GDP growth for the year was positive at 0.5%, a sharp deceleration from 2.7% in 2007.

The volume of imports fell faster than exports but both registered their largest quarterly decline since 1982. Prices of imports climbed, notably because the Canadian dollar depreciated 14% in the quarter relative to its U.S. counterpart, its largest quarterly depreciation since Canada returned to a floating exchange rate in 1970.

Declines in the production of goods, down 2.4% were widespread as domestic and foreign demand weakened. Except for agriculture, all other goods-producing sectors receded. At -4.3%, manufacturing led the downturn, its sixth straight quarterly decline.

Exports of goods and services were down 4.7%, their sixth consecutive quarterly decline and a first in Canada since quarterly estimates began over 60 years ago. Automotive products were down 19%, accounting for nearly half of the quarterly decline in total exports. Industrial goods and materials also decreased significantly in the fourth quarter.

Imports dropped 6.4% in the fourth quarter. Declines were registered for both goods and services imports, as domestic demand faltered and prices for imported goods and services rose.

Imports of automotive products declined 16% while other consumer goods were down nine per cent, reflecting a downturn in consumer spending.

After decelerating since the start of the year, personal spending fell for the first time since the fourth quarter of 1995. Both goods and services contributed to the 0.8% decline.

Read more here. Summary statistics and a link to the data files are on the Statistics Canada website at Statistics Canada website.