According to the Globe and Mail, the National Bureau of Statistics Canada announced today that the country's GDP in the fourth quarter of this year will recover to 1% on an annualized basis in the fourth quarter of next year, higher than the previous forecast of 08%。
Separately, since the public** campaign in Quebec has been completed, the INE initial estimate shows that real GDP will rise again by 04%。
Avoid a recession and achieve a soft landing.
Canada** has seen a significant slowdown in growth since a series of rapid interest rate hikes to curb consumption and curb inflation. Excluding the U.S. economy, which was hit by the pandemic in 2020, last year recorded the lowest GDP growth rate since 2016.
There is reason to believe that Canada's economy will return to normal by the end of 2023 and avoid a year of depression.
Overall, the U.S. economy is still struggling to maintain growth, so there is a good chance that the banks will achieve a rare soft landing. **Banks hope inflation can be tamed, but unemployment will not increase.
Canada looks to have received a big boost from the strength of the U.S. economy. U.S. exports of goods and services rose at an annualized rate of 56%。The statistics bureau said that the increase in imports was mainly driven by petroleum, petroleum and other products.
While spending per person has fallen in the past three months, consumer spending has risen at a rate of 1% per year. The company said the increase in overall expenses "is due to the addition of new trucks, container trucks, and utility vehicles, which allows the execution of orders that have been delayed, so that the problems in the chain can continue to ease." ”
Although business revenue declined, it continued to rise, growing by 3After 4%, the fourth quarter of this year grew by 29%。In the last season's **0After 1%, household consumption rose by 02 percentage points. But Canada's economy has weakened after the strongest population growth in decades, causing a decline in per capita production.
While showing good signs of growth, today's report also sheds some concerns. For example:
In seven quarters, fixed asset investment in physical enterprises fell for six months, while investment in non-residential housing fell by 3%. The company has also slowed down inventory inputs, which has slowed growth. Residential investment in the current quarter was also **04%, the sixth month in the last seven months. The housing agency says that although there are many new homes and renovations, the market for second-hand homes has not yet recovered. In the third quarter, wage growth slowed in the services sector and lower wages in the goods-producing sector compared to the previous quarter. Overall, employee salaries rose by 08%, the lowest level since the second quarter of 2020. Domestic demand in the United States (including residents, spending, and capital investment) fell by an average of 07%。
Is interest rate cuts just around the corner?
In terms of the recent flurry of data, many analysts say that the numbers imply that Canada's economy is in a very weak state, and that only when the overall numbers are supported by a strong economy in the United States can the pressure on the banks to lower interest rates be alleviated. They don't expect the bank to cut interest rates until the middle of the year.
Royce Mendes, head of macro strategy at Jarding**, said in a client note: "With high interest rates taking a huge toll on consumption and commerce, the U.S. economy looks like it's starting to weaken. This year's economic growth did not start in Canada, which was particularly disappointing because of the rapid growth at the end of last year.
In the fourth quarter, the deposit rate of U.S. residents reached 62% from 6 in the same period last year3% is down. Mendes said the figure was significantly higher than before the flu outbreak, suggesting that people were saving more to pay off their debts or expected to do the same in the future.
Natan Janssen, an analyst at the National Bank of Canada, also noted that GDP growth was "too small" to prevent its six-year average GDP decline as the population continued to surge.
Canada's economy is showing some vitality in the fourth quarter of next year," James Holland, a senior analyst at Toronto-Dominion Bank, wrote in a customer story. Even so, "people's perception of Canada is not going to change: high interest rates are a hindrance to growth." "In the last six months, five countries have seen declines. ”
Andrew Grantham, an analyst at Cibc Capital Markets, said"The economic growth appears to be largely due to the increase in exports and auto sales driven by the previous lifting of supply constraints, rather than the increase in domestic demand. "
Canada's inflation rate has fallen by more than 50% per year to 29%, which is also close to the 2% target set by ** banks. The likelihood of a reduction in interest rates is increasing.
While some investors believe that the Bank of Canada will cut its interest rate in April, analysts from many private companies reaffirmed their expectation on Thursday that they will cut their basic deposit rate from June.
Analysts believe that numbers will appear in the coming months, but a strong economy will keep interest rates high for national banks** for longer.
As Doug Porter, Principal Analyst at BMO Capital Markets, put it:"Today's data, while mixed, will send a signal that there is no urgency to cut interest rates. ""The U.S. economy is not in recession, but it is moving forward. "
* The bank's benchmark interest rate is now at 5%, the highest since 2001. The Bank of Canada**'s decision next week is expected to keep interest rates flat.
Money markets are pricing in a more than 80% chance of a rate cut in June, and the probability of a 25 percentage point rate cut in July has been fully realized.