Canada's Economy Outpaces Forecast Amid Fiscal Stimulus

Canada's economy grew by 2.1% in Q2, surpassing expectations due to government expenditure, higher business investments, and increased consumer spending on services. Despite this growth, GDP per capita continued to decline. The upcoming Bank of Canada monetary policy decision next week is anticipated to include another rate cut.

Canada's economy experienced a 2.1% annualized growth in the second quarter, surpassing analysts' expectations. This boost was driven by enhanced government spending, increased business investment, and higher consumer expenditure on services, according to data released on Friday.

Despite the overall growth, per capita GDP contracted for the fifth consecutive quarter, raising concerns ahead of the Bank of Canada's monetary policy announcement next week. Analysts expect a further cut to the benchmark rate, which has already been reduced twice since June to 4.5%.

Economic indicators suggest a loss of momentum due to high interest rates, with rising unemployment and looming mortgage renewals adding pressure on the central bank. BoC Governor Tiff Macklem has signaled a potential shift in focus towards boosting the economy instead of solely targeting inflation.

(With inputs from agencies.)