Originally published November 4 2005
Canadian economy strengthens with oil and gas output
by Mike Adams, the Health Ranger, NaturalNews Editor
Reporting an 0.2 increase in the national economy during July, the Canadian government saw its currency strengthen as investors took a greater interest in the development of oil fields and the mining industry continues its significant expansion.
Canada's economy, the world's eighth-largest, expanded by 0.2 percent in July as the nation's oil and gas producers increased output.
The initial estimate of July gross domestic product, the total value of goods and services produced, followed an expansion of 0.3 percent in June, Statistics Canada said in Ottawa today.
The expansion is being led by energy and mining companies, which are boosting production to take advantage of surging commodity prices.
Bank of Canada Governor David Dodge will continue raising interest rates next month as growth threatens to fuel inflation, economists said.
``If growth holds up through the first half of next year, we think we'll see the policy rate both in the U.S. and Canada sitting at 4.5 percent by the fall,'' said Ted Carmichael, chief Canadian economist at JPMorgan Securities Canada in Toronto.
Policy makers will raise the rate again to keep inflation in check when they meet on Oct. 18, economists predict.
Canada's dollar rose to 85.89 U.S. cents at 9:26 a.m. in Toronto, from 85.36 cents late yesterday.
Canadian energy companies, which posted a 44 percent increase in operating profit last year, are racing to overcome bottlenecks to raise production.
They will also increase spending on oil-field development by 13 percent to C$35 billion this year to meet growing demand, the Canadian Association of Petroleum Producers predicts.
Canada has the world's second-highest oil reserves after Saudi Arabia.
Expanding energy production is combining with a borrowing- fueled spending spree by households, whose saving rate has fallen below zero, to boost growth above the 3 percent threshold the central bank reckons the economy can expand without sparking inflation.
Retailing, which makes up about 6 percent of Canada's economy, grew by 1.2 percent in July, Statistics Canada reported.
Manufacturing, construction, wholesaling and utilities all posted declines.
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