Canada's economy outperformed expectations in the final quarter of 2024, driven by a significant increase in household spending. Real GDP grew by 2.6% on an annualized basis, exceeding forecasts and signaling a strong finish to the year.
The Canadian economy exceeded expectations in the final quarter of 2024, according to Statistics Canada, primarily driven by a robust increase in household spending . Real gross domestic product (GDP) expanded by 2.6% on an annualized basis in the fourth quarter, surpassing the consensus forecast of economists polled by Reuters and the Bank of Canada, both of which predicted a 1.8% annualized growth. The report also revealed that the Canadian economy grew by 2.
2% annualized in the third quarter of 2024, revised upwards from the initial estimate of 1% growth.Household spending surged by 1.4% in the fourth quarter, marking the fastest pace in over two years, as reported by StatCan. This growth was fueled by strong purchases of new trucks, vans, and sport utility vehicles. Retail activity was particularly strong in December, with a 2.6% increase in retail trade, the largest jump since June 2021 when COVID-19 pandemic-related restrictions on in-person shopping began to ease. Despite disruptions caused by the Canada Post strike, the transportation sector experienced a notable increase in December, attributed to a surge in business for couriers and the resolution of rail and port strikes in November, leading to a rebound in growth.Residential construction also witnessed its fastest growth rate in over three years during the fourth quarter, according to StatCan, while drawdowns on business inventories partially offset this growth. StatCan reported that real GDP per capita grew by 0.2% in the last quarter. On a per-person basis, the Canadian economy had contracted in five out of the previous seven quarters, although the agency revised the results for the second quarter of 2024 to positive territory. StatCan indicated that real GDP increased by 0.2% in December and its preliminary estimate suggests a slight acceleration to 0.3% growth in January. The latest GDP figures suggest a Canadian economy gaining momentum heading into 2025 following a series of interest rate cuts by the Bank of Canada aimed at stimulating growth. However, this trajectory is vulnerable to threats posed by tariffs from U.S. President Donald Trump, whose deadlines to impose substantial import taxes on Canadian goods are approaching.
Canadian Economy GDP Growth Household Spending Statcan Interest Rates
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