Forecast and Progress of Canada’s Economy
Contrary to the discouraging statistics for November, an advanced flash estimate for December’s gross domestic product pointed towards a 0% expansion in Canada’s economy for the concluding month of 2024. Consequently, this puts it on course for a projected increase – annualized at 1% for the fourth quarter. This growth projection aligns perfectly with the economic calculus of the Bank of Canada.
This predicted growth highlights a marked improvement from the third quarter and underscores steady advancements in Canada’s domestic economic scenario. Toronto-Dominion Bank’s economist, Marc Ercolao, opined that the recent figures are within expected parameters.
The Impact of Sectoral Performance on Canada’s Economy
However, Andrew Grantham, the senior economist at the Imperial Bank of Commerce, harbors anxiety over how potential tariffs could stunt Canada’s economic progression and hinted at the likelihood of future interest rate deductions from the Bank of Canada.
The economic deceleration in November was chiefly attributed to downturns in the transport and warehousing sector, witnessing a drop in output by 1%. The halt in operations at the Port of Vancouver and the Port of Montreal, in addition to the Canada Post strike, were key contributors to this decline.
Despite these setbacks, sectors sensitive to rates such as real estate, rental, and leasing sectors observed positive growth trends. In addition, the construction sector displayed promising improvements. There was a consistent monthly rise in residential construction, while sectors linked to lodgings, food, arts, recreation, and entertainment registered significant growth during the same period.
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Trade Matters and Policy Concerns
The contraction in November expressed concerns about the durability of the economy in the face of potential tariff shocks. However, Benjamin Reitzes, an economist with the Bank of Montreal, noted that Canada’s central bank policymakers maintain a keen focus on trade developments.
The uncertainty that continues to shroud tariffs has dimmed the GDP reading’s spotlight, thus underlining the need for careful trade dynamics observation. With the economy exhibiting traits of both robustness and susceptibility, the future outlook largely depends on how external elements, especially trade policies, unfold in the coming times.
