Canadian economy grew slightly in November, expected to slow further
OTTAWA –
The Canadian economic system grew barely in November and appears to have stalled additional on the finish of the 12 months as greater rates of interest started to gradual spending.
Statistics Canada’s preliminary estimate for actual GDP in December signifies the economic system stayed flat, suggesting the economic system grew at an annualized price of 1.6 per cent within the fourth quarter of final 12 months.
In comparability, the economic system grew at an annualized price of two.9 per cent within the third quarter of 2022.
The stalled progress comes after the economic system grew by 0.1 per cent in November, the federal company stated Tuesday.
Growth in actual home product for the month was pushed by the general public sector, transportation and warehousing and finance and insurance coverage.
Statistics Canada’s report notes that the elimination of COVID-19 journey restrictions have spurred progress in transportation and warehousing.
Meanwhile, building, retail and lodging and meals companies contracted.
“You’re starting to see more signs of maybe cracks in the consumer spending backdrop,” stated Nathan Janzen, RBC’s assistant chief economist, noting the declines in retail commerce and lodging and meals companies.
The housing market was the primary to really feel the consequences of rate of interest hikes, resulting in a slowdown in housing-related sectors.
That slowdown is anticipated to increase to different sectors within the economic system as greater borrowing prices power shoppers and companies to drag again on spending.
The Bank of Canada raised its key rate of interest for the eighth consecutive time final week and stated it was taking a conditional pause, protecting the door open to additional price hikes if inflation is not tamed.
Statistics Canada estimates that for 2022, the economic system grew by 3.8 per cent.
Looking forward, many economists are anticipating a light recession in 2023. However, the economic system is anticipated to get well within the second half of the 12 months.
“A lot of the impact of interest rate increases from the Bank of Canada to date, haven’t yet flowed through fully to household purchasing power,” stated Janzen.
“So we still do expect GDP growth to continue to slow and get into negative territory over the first half of this year.”
This report by The Canadian Press was first revealed Jan. 31, 2023.
10:56ET 31-01-23
