Recent Developments
Canada's real GDP grew at an annual rate of 3.7 per cent in the first half of 2004. This was stronger than projected in the April Report. A key component of this growth was a surge in exports. This reflected the strengthening of global demand and a recovery from the unusually low level of exports seen in 2003. Household spending also grew vigorously, and business capital spending rose substantially. Recent indicators suggest that the economy grew at an annual rate of about 3 per cent in the third quarter of 2004.Canadian firms have continued to adjust to developments in the global economy. There have been changes in the activity, employment, and capital spending plans of many companies, particularly those highly exposed to international competition. This adjustment process is still underway. Nonetheless, the Bank's autumn Business Outlook Survey suggests that, overall, Canadian firms have remained confident about their sales prospects, with firms in the West significantly more optimistic than those in Central and Eastern Canada. Investment intentions remain fairly high in most sectors, with manufacturing continuing to be an exception.
The Canadian dollar has exhibited significant movements since the April Report and is currently about 7 per cent stronger against the U.S. dollar than it was then. Some of the factors contributing to the appreciation of the Canadian dollar during this period include faster-than-expected economic growth in Canada, slower-than-expected growth in the United States, and firm prices for many commodities.
Canada's real GDP grew at an annual rate of 3.7 per cent in the first half of 2004. This was stronger than projected in the April Report. A key component of this growth was a surge in exports. This reflected the strengthening of global demand and a recovery from the unusually low level of exports seen in 2003. Household spending also grew vigorously, and business capital spending rose substantially. Recent indicators suggest that the economy grew at an annual rate of about 3 per cent in the third quarter of 2004.
Canadian firms have continued to adjust to developments in the global economy. There have been changes in the activity, employment, and capital spending plans of many companies, particularly those highly exposed to international competition. This adjustment process is still underway. Nonetheless, the Bank's autumn Business Outlook Survey suggests that, overall, Canadian firms have remained confident about their sales prospects, with firms in the West significantly more optimistic than those in Central and Eastern Canada. Investment intentions remain fairly high in most sectors, with manufacturing continuing to be an exception.
The Canadian dollar has exhibited significant movements since the April Report and is currently about 7 per cent stronger against the U.S. dollar than it was then. Some of the factors contributing to the appreciation of the Canadian dollar during this period include faster-than-expected economic growth in Canada, slower-than-expected growth in the United States, and firm prices for many commodities.
