Canada GDP top forecasts, dodging recession

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Canada’s economy grew more than expected in the fourth quarter of 2023 due to higher exports and reduced imports, Statistics Canada said Thursday.

Real gross domestic product (GDP) on an annualized rate grew by one per cent in the fourth quarter, beating economists’ forecasts of 0.8 per cent, and rebounding from a 0.5 per cent contraction in the third quarter.

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The fourth quarter ended with a flat reading in December, but the early estimate for January is 0.4 per cent, the strongest monthly pace in a year.

Though the growth suggests a rebound, CIBC economist Andrew Grantham cautioned that details in the report suggest that domestic demand remains weak.

Trade was the biggest driver of growth, with exports rising 5.6 per cent and imports dropping. Consumer spending was tepid at 1 per cent and government and business investment both declined.

The GDP reading is the last data before the Bank of Canada‘s interest rate decision on March 6 and it reinforces the case for the central bank to wait until June for its first cut, said Capital Economics’ Stephen Brown.

More to come …

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