OTTAWA, Ont. — Concerns that Canada’s economy may lose steam due to the continuing sluggishness of the U.S. economy and the uncertainty over war in Iraq have been raised.
This, following Statistics Canada’s release of disappointing fourth quarter GDP growth figures today.
Economic activity slowed in the fourth quarter of 2002, as real gross domestic product (GDP) advanced 0.4%, less that one-half of the pace set in the third quarter, Statistics Canada reported.
A drop in exports during the quarter was only partly offset by sustained strength in personal expenditures.
“The economy lost steam over the course of the quarter, with GDP up a modest 0.1% in November and December,” Statistics Canada commented in its Daily Bulletin.
The 2.1% drop in exports in the fourth quarter, which was concentrated in automotive products, came on the heels of three consecutive quarterly gains. Total automotive exports, including passenger vehicles, trucks and parts, recorded their largest drop since the fourth quarter of 1996. Exports of passenger vehicles alone plummeted 17%. Wheat exports were sharply reduced (-27%), in line with the drought-reduced stocks. The few sources of strength in exports included forestry products and oil.
It’s not all bad news, however. Although economic growth decelerated over the four quarters of 2002, the economy grew 3.4% for the year, more than double the rate for 2001.
Businesses accumulated almost $10 billion in inventories in the fourth quarter, extending the large accumulations that began in the second quarter. Increases were evident across manufacturing and trade industries, with retail motor vehicle inventories accounting for more than 40% of this buildup. Grain stocks were drawn down in the quarter, however.
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