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OTTAWA—The Canadian economy rebounded in the second quarter with its best performance in two years, as one of the strongest showings this decade from exports offset a decline in business investment and softness in household spending.
The result bested market expectations and was well above the Bank of Canada’s forecast. Nevertheless, market watchers are increasingly convinced the Bank of Canada could join the Federal Reserve and cut its benchmark interest rate later this year because of an escalation in the global trade tensions. The drop in capital spending and a slowdown in household spending could reinforce this belief.
Canada’s gross domestic product, or the broadest measure of goods and services produced in an economy, rose at a 3.7% annualized rate in the second quarter, to 2.085 trillion Canadian dollars ($1.568 trillion), Statistics Canada said Friday. In comparison, U.S. GDP advanced 2% in the second quarter, according to revised data this week, and the German economy contracted in the April-to-June period.
Canada’s second-quarter performance marks a sharp turnaround after growth essentially stalled at the turn of the year, with a meager 0.5% expansion in the first quarter and a 0.4% gain in the final three months of last year. The last time Canadian GDP expanded this strongly was in the second quarter of 2017, when growth accelerated 4.4%.
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