Canada's Economic Surge: Unexpected GDP Growth Surpasses Forecasts

Canada's GDP grew by 2.6% annualized in Q4, surpassing expectations due to a rise in consumer spending, business investments, and exports. December saw a 0.2% expansion reversing November's contraction. The Canadian dollar gained and bond yields rose post-announcement. Household spending and residential construction also showed significant growth.

Canada's GDP experienced a surprising jump, growing by 2.6% on an annualized basis in the fourth quarter, as robust consumer spending, business investments, and exports propelled this expansion, according to data released on Friday. This figure exceeded projections from analysts, who had anticipated a 1.8% increase.

Statistics Canada revised the third quarter growth rate upwards to 2.2% from an earlier reported 1%. The month of December posted a 0.2% growth, overturning November's contraction, driven by vigor in retail sales and a mid-December sales tax break.

The Canadian dollar strengthened, rising 0.15% against the U.S. dollar after the news. The economy showed recovery signs amid a rate cut to 3%, aiming to stimulate growth against risks like falling immigration and U.S. tariffs. Household and business investments further drove growth, the report noted.

(With inputs from agencies.)