Canadian economy remained flat at the end of 2022: StatCan

This was after five consecutive quarters of growth

Canadian economy remained flat at the end of 2022: StatCan

Canada’s real gross domestic product was unchanged at the end of 2022 after five straight quarters of growth, according to the national statistics agency.

GDP remained flat in the fourth quarter, with slower inventory accumulations and declines in business investment in machinery, equipment, and housing offsetting improved net trade and greater household and government spending.

This is despite full-year real GDP and domestic demand rising on an annual basis for the second consecutive year, following the pandemic-era contraction in 2020.

Statistics Canada had a preliminary estimate of 1.6% annualized growth for Q4.

What does flat GDP mean for the Bank of Canada’s rate-hike freeze?

Economist Sherry Cooper said that the GDP data is a very welcome development for the central bank, “having promised a pause in rate hikes to assess the impact of the cumulative rise in interest rates over the past year.”

“[The latest] GDP report and the slowdown in the January CPI inflation numbers portend no interest rate hike on March 8,” Cooper said. “Now the bank will be looking for a softening in the labour market.”

In a separate analysis, TD Economics said that the trend defied its expectations for another round of robust GDP gain in Q4 2022. However, it is still anticipating improvement in GDP during the first quarter.

“The GDP flash estimate for January is consistent with our view of a bounce back, led by an uptick in consumer spending following the most recent jobs surge,” TD said. “Although the BoC probably feels vindicated in its policy rate pause given the weak topline print, it will still be closely watching the evolution of incoming data, which have surprised higher to start 2023.”