Canada GDP: Will Growth Continue To Stumble?

Countries are still feeling the repercussions of the strained supply chains from either the pandemic or the war in Ukraine, and Canada was no exception.


However, after reporting a negative monthly GDP percentage change in December 2022 of -0.1%, it showed a strong start to 2023 in which the GDP increased by 0.54% MoM in January, but then it decelerated again for the two months, and it is expected to also record a decline of 0.1% MoM.


The upcoming GDP reading is vital for the Bank of Canada, as it will be a key factor in determining future interest rates, besides the CPI and jobs report data. The Bank of Canada has held interest rates the same during the last two meetings as a pause from the aggressive rate hikes of last year, but with the latest CPI reading and the strikes in the public sector, a hawkish shift could be expected. However, the central bank will face a hard decision considering its declining GDP growth.


“We’re looking for first quarter GDP to climb 2.5 per cent annualized…but policymakers are anticipating a slowdown through the rest of the year, and firmer March and April readings would not be consistent with a slowing economy,” stated Benjamin Reitzes, a managing director of Canadian rates and macro strategist at BMO Capital Markets.


The figures revealed today will provide investors hints towards future moves of the CAD and Canadian stocks. A good GDP reading reflects a strong demand, which could translate towards stronger earnings and higher stock prices. The opposite could also be true for a negative reading.




The content published above has been prepared by CFI for informational purposes only and should not be considered as investment advice.  Any view expressed does not constitute a personal recommendation or solicitation to buy or sell.  The information provided does not have regard to the specific investment objectives, financial situation, and needs of any specific person who may receive it, and is not held out as independent investment research and may have been acted upon by persons connected with CFI.  Market data is derived from independent sources believed to be reliable, however, CFI makes no guarantee of its accuracy or completeness, and accepts no responsibility for any consequence of its use by recipients.