Statistics Canada’s newest GDP information confirms the Canadian financial system continued to develop within the ultimate quarter of 2024, increasing by 0.6%. The expansion was pushed largely by greater family spending, elevated exports, and stronger enterprise funding.
On an annualized foundation, This fall GDP rose 2.6%, exceeding economists’ expectations by practically a full proportion level. On a per capita foundation, Canada’s actual GDP—adjusted to exclude progress from inhabitants will increase—rose 0.2% in This fall, following a 0.1% decline within the earlier quarter.
StatCan’s GDP report for December 2024 confirmed the financial system grew by 0.2%, partially reversing November’s decline, although the rise got here in barely beneath economists’ expectations.
Within the background, StatCan revised its GDP information for each Q2 and Q3 2024 considerably greater. Q2 progress was adjusted to 2.8% from 2.2%, whereas Q3 was revised to 2.2% from 1.0%.
“The Canadian financial system had good momentum by the again half of 2024, as aggressive Financial institution of Canada price cuts helped juice exercise,” famous BMO’s Benjamin Reitzes. “Sadly, most of this was largely earlier than tariff threats actually ramped up.”
Markets break up on March price lower as tariff considerations take centre stage
Whereas sturdy GDP progress to finish 2024 would sometimes assist a pause in price cuts, some economists argue that final 12 months’s information is unlikely to sway the Bank of Canada’s determination.
“At the moment’s GDP launch isn’t going to sway the BoC. Sure, the report was sturdy, however Governor Macklem is extra involved in regards to the dangers on the horizon moderately than what occurred final 12 months,” says TD‘s James Orlando. “The financial institution’s personal analysis reveals large draw back dangers to the financial system ought to tariffs come to move.”
Orlando added that market odds for the subsequent BoC price determination is principally a coin toss.
“Nobody would complain if the BoC took out extra insurance coverage towards the draw back dangers with one other 25 bp lower, whereas a maintain is also justified ought to the financial institution desire to take a wait-and-see strategy,” he mentioned.
Nevertheless, RBC’s Nathan Janzen and Carrie Freestone argue that the power of This fall 2024 progress alone is sufficient to justify a price pause, even with out factoring in potential tariffs from the U.S.
“We anticipate the indicators of life within the family sector and upside inflation surprises in latest months shall be sufficient for the BoC to face pat on rates of interest in March for the primary time since June 2024,” they wrote. “The potential for vital tariff hikes stay a draw back danger to financial progress and the rate of interest outlook, however absent a commerce shock, financial information is suggesting Canada’s financial system could also be faring higher than initially feared.”
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Final modified: February 28, 2025
