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Canada's economy grows at fastest pace since 2000Tuesday, March 02, 2010 > 10:40:17
Business reporter - BBC World Service
Canada's economy grew at an annual rate of 5% during the last quarter of 2009, its fastest pace of expansion in nine years, according to official figures.
The figures underpin claims the economy is recovering quickly from the fallout of the global downturn. It comes after data for the previous three months showed growth of 0.9%, on an annualised basis.
The country's economy was boosted by rising consumption, government spending and property investments. Canada's economy has rebounded strongly like its neighbour, the US.
The American economy grew at an annualised rate of 5.9% in the last three months of 2009, the Commerce Department said last week, revised higher from the first estimate of 5.7%.
A majority of Canadian exports head to customers south of the border, but businesses are being encouraged to focus on markets other than the US.
Len Crispino, the president and chief executive of the Ontario Chamber of Commerce, told the BBC World Service: "There are still concerns about how fast [the US] economy will pick up. A number of small and medium-sized companies need to diversify away from that market," he said.
Fast economic growth
Canada's growth, its fastest since the third quarter of 2000, was more than economists had predicted, as well as outstripping the forecasts of the country's central bank.
The news pushed the value of the Canadian dollar higher against the US dollar, a nagging concern for companies that export to America.
The independent Virginia-based economist, Dennis Gartman, is telling his clients to go long on the Canadian dollar, or the Loonie, as it is colloquially known.
He told the BBC World Service: "The data simply underscores the fact that the Canadian economy is in demonstrably better shape than that of the US. Am I surprised by the news from Canada? No I am not. I am only more certain that erring long of Canadian dollars and short of euro and sterling makes more and more sense," he said.
Higher interest rates?
The fact that the economy is growing faster than forecasts will be welcome at the Bank of Canada, but it also brings a new challenge, analysts said.
On Tuesday, the central bank is due to announce its latest decision on interest rates, and the strong economic growth puts it under pressure to consider increasing rates.
However, economists are predicting that the Bank of Canada will keep rates on hold for now, but increase the cost of borrowing in the coming months.