Canada Intraday Economic Commentary GDP Reaction ¡V Firing On Most Cylinders

• Output Surge ¡X Real GDP rose by an outsized 5.0% annualized in the final
quarter of 2009, besting both our (+4.3%) and Street (+4.2%) expectations.

• Robust Domestic Demand ¡X As anticipated, domestic demand stemming from
household consumption and residential investment contributed heartily to
growth.

• External Trade Injection ¡X Following two consecutive periods of drag, net
exports added 1.5% annualized to real output in 4Q. Unlike the first half of
2009, the positive contribution reflected stronger exports than imports.

• Firing On Most Cylinders ¡X The business sector continued to flag as fixed
investment and inventories fell. Government spending ¡V much of it stimulus ¡V
accounted for one-third of the swell in output during the reference period.

• Policy Implications ¡X The BoC probably will state that Canadian growth is
exceeding policy makers¡¦ expectations. But lingering downside risks stemming
from the strong Canadian dollar and soft U.S. domestic demand probably will
prevent the bank from altering the policy stance materially Tuesday.

 •BoC Monetary Policy Primer ¡V See Canada Weekly Notes: Mar 1 ¡V 5 for the full
policy primer

Canada Intraday Economic Commentary GDP Reaction ¡V Firing On Most Cylinders