Canada’s gross domestic product was flat for July, matching Statistics Canada’s early estimate but falling short of analysts’ expectations of 0.1 per cent growth.
In its flash estimate for August, the agency expects GDP to rise 0.1 per cent.
The Bank of Canada is forecasting growth of 1.5 per cent in the third quarter, but some economists think this is too optimistic.
“All told, assuming growth remains modest in September as the impact of high interest rates continues to bite, that leaves the Canadian economy on track for a flat-to-very low positive print for all of Q3,” said Robert Kavcic, an economist with Bank of Montreal, after the data came out on Sept. 29.
Here is what economists are saying about the latest data.
“The GDP growth backdrop in Canada continues to soften, in contrast to sticky inflation prints that are still running above the Bank of Canada’s 2 per cent target. With interest rates already at very restrictive levels, further increases from the BoC and other central banks will remain very data dependent. Firmer-than-expected inflation readings in Canada have increased the odds of another BoC interest rate hike this year. But inflation lags the economic cycle and there are growing signs that the impact of earlier interest rate increases are working to cool the economy. There is another CPI and labour market report before the next BoC decision on October 25th. Our own base-case forecast does not assume additional BoC interest rate hikes.”
“With today’s print and August’s flash guidance, there is downside risk to our modest expectation for one per cent growth in the third quarter. It is also considerably lower than the Bank of Canada’s 1.5 per cent estimate. Not surprisingly, today’s print ultimately tamped
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