Canada delivers golden Q4 economic performance

Mon Mar 1, 2010 3:20pm EST
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By Louise Egan

OTTAWA (Reuters) - Canada reported sizzling fourth-quarter economic growth on Monday, blasting away lingering doubts about recovery from recession and putting pressure on the Bank of Canada to raise interest rates sooner than it had planned.

Strong consumer spending, housing demand and exports boosted gross domestic product by 5 percent at an annualized rate, Statistics Canada said. That was the strongest rate since 2000 and well above the 4.1 percent market forecast, a result Prime Minister Stephen Harper called "encouraging."

Statscan revised its calculation of growth in the third quarter to 0.9 percent from 0.4 percent previously.

The federal agency also reported on Monday a rise in producer prices and raw materials prices in January from December due to rising oil prices.

The Q4 growth report gave hockey-crazed Canadians another excuse to celebrate a day after becoming Olympic champions in the national sport, clinching a record gold medal haul in the 2010 Winter Games, which ended Sunday.

Most economists could not resist the temptation to gush over "another gold medal" for economic performance.

"A bit like Canada's Olympic team, the economy got much, much stronger in the second half," said Doug Porter, deputy chief economist at BMO Capital Markets.

The Bank of Canada is still widely expected to keep its key interest rate unchanged at 0.25 percent in its policy announcement on Tuesday. But stronger-than-expected growth and inflation could persuade it to raise rates earlier than it had planned, analysts said.   Continued...