Canadian economy loses steam after strong start to year, grows 0.2% in February

The Canadian economy lost momentum after a roaring start to the year, reinforcing economists’ expectations that the Bank of Canada is on track to cut interest rates in the coming months. Statistics Canada reported Tuesday that real gross domestic product rose 0.2 per cent in February. That followed a 0.5 per cent gain in January.
“Today’s GDP report confirmed our expectations that the January surge in output was temporary, and in no way marked an inflection point for the growth backdrop in Canada that remains very weak,” said RBC economist Claire Fan in a client note.
Looking ahead, the federal agency says its advance estimate for March indicated that real GDP was essentially unchanged for the month. Based on the preliminary figure, the Canadian economy grew at an annualized rate of 2.5 per cent in the first quarter of 2024. Although the economy continues to expand, economists say the latest data reinforces the idea that the growth is sluggish as higher interest rates weigh on consumer and business spending decisions.
That will likely land as good news for the Bank of Canada, which is looking for continued evidence that the economy and inflation are responding to tighter monetary policy.
Governor Tiff Macklem said earlier this month that the central bank is already seeing the right conditions to begin lowering its policy rate from five per cent. But he said he wants to see those conditions sustained to ensure inflation is in fact heading down to the bank’s two per cent target.
Source:https://www.ctvnews.ca/