Business

Winnipeg Free Press - PRINT EDITION

Cautious optimism from April growth

By: Julian Beltrame

Posted: 07/1/2012 4:14 AM | Comments: 0

OTTAWA -- Canada's economy is proving somewhat resilient against global economic turmoil, recording a surprisingly perky 0.3 per cent gain in April that points to modest growth.

Analysts said Friday April's performance, while above the consensus estimate of private sector economists, stemmed largely from strength in the resource sector that may not be sustainable at such heady levels.

But they also noted the monthly gain likely sets up the economy for second-quarter growth of about two per cent when all numbers for the April-June period are in, about the same or slightly better than the first quarter.

Finance Minister Jim Flaherty said he was "pleased" with the result, while stressing the economy still faces headwinds from abroad.

"April's economic growth and the nearly 760,000-net new jobs created since July 2009 are positive signs we are on the right track," he said in a call from Ireland. "But we are also cognizant that the challenges of weaker global growth and financial turmoil persist."

A bigger development for the long-term viability of the Canadian recovery came from Brussels earlier in the day with news European leaders had agreed to direct emergency funding of troubled banks. The breakthrough means highly indebted national governments need no longer carry the bank-bailout packages on their books, with the resulting improvement to their fiscal positions.

Flaherty said if the details agree with the headlines, the EU has taken "significant strides" toward containing the continent's debt problems.

Markets in Europe and North American rebounded on the announcement, while yields on Spanish and Italian government bonds fell back sharply, easing pressure on their budgets.

Canada's economy has felt the pinch from Europe's problems, but has also stayed above water thanks in part to strong commodity exports.

April's performance showed Canada's resource sector remains the most reliable engine of growth, even in bad times.

Mining and oil and gas extraction bounced back 2.7 per cent in April after declines of 2.0 per cent in February and 1.1 per cent in March.

The rebound had been expected since setbacks in the previous two months were mostly due to temporary maintenance and production difficulties. Economists cautioned such a strong pace of growth from the sector is unlikely to be sustained going forward.

-- The Canadian Press

Republished from the Winnipeg Free Press print edition July 1, 2012 B11

Factual inaccuracy? Something missing? Help improve our journalism.

Know about news? Share your story suggestions, photos and video.

Spelling error? Punctuation problem? Send us an email if you’ve found a typo.

More Business

Undock

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is register and/or login and you can join the conversation and give your feedback.

Have Your Say

New to commenting? Check out our Frequently Asked Questions.

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010.