Here is the report in its entirety. Seems like the previous Liberal government did a good job of managing the country's economy . . . So much for spin.

Background

After surging in the first quarter of 2006, real GDP growth in Canada slowed subsequently, in part reflecting a cooling in the United States, and 2006 growth is estimated to have eased to 2¾ percent. Nonetheless, employment gains have been significant, and the unemployment rate fell to 6.1 percent, its lowest level in more than 30 years. This has partly reflected large regional disparities in economic performance, with output, wages, and prices, especially housing prices, growing much faster in the resource-rich western provinces, particularly Alberta, than in the rest of the country.

Domestic demand remained the main driver of the economy, with private consumption expanding a robust 3¾ percent and business investment growing 8 percent. Residential investment, however, started declining in the second quarter, finishing the year as a whole only 2½ percent above its 2005 level. Net exports continued to be a drag on activity, reflecting the effects of past currency appreciation and a slowdown in the United States, especially on the manufacturing sector.

A sharp decline in natural gas prices and a fall in real net exports combined to reduce the estimated 2006 current account surplus to 1¾ percent of GDP. In recent months, the Canadian dollar has also weakened somewhat, partly in response to the decline in world energy prices and diminished market expectations of a narrowing of the interest rate differential vis-à-vis the United States, but the currency still remains roughly 35 percent higher against its U.S. counterpart than it was in late 2002.

After seven ¼ percentage-point hikes through May 2006, the Bank of Canada has since left its target rate unchanged at 4¼ percent, reflecting (...read more...)