EDMONTON, Alberta (Reuters) - There appears to be more momentum in the Canadian economy in the first quarter than the central bank had anticipated in its quarterly forecasts last month, Bank of Canada Governor Mark Carney said on Wednesday.
“Very short-term performance, yeah, there is on average a bit more momentum,” Carney told reporters when asked if he saw growth surpassing the bank’s forecast of 1.5 percent annualized growth in the first quarter.
The economy grew 0.3 percent in both February and March, Statistics Canada reported on Tuesday, prompting economists to upgrade their first-quarter forecasts to above the 1.5 percent annualized growth predicted by the central bank.
In particular, Carney said the bank’s assumption for the export performance of manufactured goods and services relative to the level of demand may have been “too conservative.”
The bank’s Monetary Policy Report in April listed three factors that could potentially boost economic growth more than its forecasts suggest - the possibility of stronger private sector demand in the United States, of stronger Canadian exports and of renewed momentum in the housing market.
Carney weighed in on the question of whether too much was being invested in Canada’s oil and gas sector. He said North American energy security - including Canada - was within reach, for economic and geopolitical reasons.
“So it would appear logical and profitable to pursue sensible projects, weighing social license, other factors - that’s consistent with the achievement of that,” he said.
Carney added that one could not help noticing very large differential of natural gas prices in Asia and North America.
“It would appear to be a commercial opportunity there. So it’s not evident...that we’re in a situation where there’s been too much capital put in this direction. It doesn’t mean any individual project can’t be faulty and people won’t make mistakes but the broad brush would appear attractive.”
Carney steps down on June 1 to head the Bank of England starting in July. His successor is expected to be named shortly.
Reporting by Daren Zomerman; Writing by Louise Egan and Alastair Sharp; Editing by Jeffrey Hodgson and Lisa Shumaker