Canada's Q4 GDP Growth Outpaces Estimates, Bolstered by Rate Cuts
In a positive end to the year, Canada's economy grew 0.2% in December, reversing a 0.2% decline in November. This result beat economists' median estimate of a 0.1% drop and surpassed the Bank of Canada's forecast of 1.8% growth for the fourth quarter.
The increase in GDP was led by retail trade, manufacturing, and construction. Real estate rose 0.3% in November, marking the seventh consecutive month of growth. Leisure-related industries, including entertainment and air transportation, also contributed to the uptick.
Ontario, Quebec, and British Columbia saw a rise in home sales, boosting the real estate sector. Construction also increased by 0.7% in November.
Despite the strong December growth, economists remain cautious due to the potential trade conflict with the United States. The Bank of Canada has lowered interest rates six times since June to stimulate the economy, but the looming tariff war could pose risks to growth and inflation.
The Bank of Canada's next rate decision will hinge on the outcome of the trade negotiations. If tariffs are imposed, the central bank may need to adjust its monetary policy accordingly.
Overall, Canada's economy ended 2024 with annualized growth of 1.4%, slightly above expectations. The Bank of Canada's rate cuts have provided a boost to activity, particularly in retail and housing, but the potential impact of a trade war remains a key concern for policymakers.