MNI:Canada Q4 GDP Grows at 1.6% Annualized Pace, Stalls in Dec
Canadian GDP grew at a 1.6% annualized pace in the fourth quarter, slowing by about half from the third quarter and stalling out in December, in line with projections the economy will flat-line in the first half of 2023.
Statistics Canada's official estimate was the economy grew 0.1% in November and its readings for December and the fourth quarter are flash estimates. November's figure matched the economist consensus, and some also said that gain would lead to growth around 1.5% in the fourth quarter.
November's increase was led by a 0.2% rise in service industries and a 0.1% decline in goods production according to the report Tuesday from Ottawa. Airline and accommodation posted strong gains while higher prices and interest rates undercut retail sales and residential construction.
The year-end figures put 2022 GDP growth at 3.8%, a year where the economy grew almost every month even as some economists said a recession was coming in the second half. A downturn remains a threat with the Bank of Canada and private economists saying GDP will stall or contract in the first half of this year.
The slowdown comes with weak global demand and Governor Tiff Macklem's 425bps of inteest-rate hikes pulling back on what he's called an overheated domestic economy.
Inflation remains above 6% and consumer demand remains supported by stronger wage gains and about the lowest unemployment rate since the early 1970s. Macklem hiked his key lending rate another quarter point earlier this month and said he's pausing, and most economists see no further rate move this year.
The Bank of Canada sees GDP growth slowing to 1% in 2023 from 3.6% last year, and says there could be some excess demand late this year. Housing is seen as a major drag on the growth rate followed by companies working off inventories, while exports and consumer spending are upward contributors.