Canadian economy shrinks in biggest decline in a year
The Canadian economy contracted by 0.2 per cent in November, the largest monthly decline in a year, Statistics Canada said on Friday.
Despite the weak November figures, an early flash estimate for December gross domestic product indicated the economy expanded by 0.2 per cent in the final month of 2024, putting it on track for an annualized increase of 1.8 per cent in the fourth quarter, in line with the Bank of Canada’s forecast. That would mark an increase over third quarter growth of 1.1 per cent.
“It’s steady as she goes for domestic growth developments, as recent data comes in more or less in line with expectations,” said Toronto-Dominion Bank economist Marc Ercolao, in a note.
Canadian Imperial Bank of Commerce senior economist Andrew Grantham said he thinks November’s contraction does not set up Canada’s economy well for a shock from U.S. tariffs, should they eventually be implemented.
“Overall, the economy appears to be in reasonable, albeit not great health and clearly risks to the future outlook have intensified due to the tariff threats,” he said, in a note to clients. “The lack of economic momentum toward the end of last year, and the negative impact of potential tariffs on the future outlook, both lean towards further interest rate cuts from the Bank of Canada.”
Bank of Montreal economist Benjamin Reitzes added that this GDP reading has little bearing on policymakers at Canada’s central bank, who will remain focused on trade developments.
“This is all old news, though, as everyone is on Tariff Watch at the moment,” Reitzes said in a note. “That’s all that matters near-term, whether we like it or not.”
The slowdown in November was driven largely by declines in the transportation and warehousing sector, in
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