Canada’s GDP Growth Slows in Q3 2024

In 2024, Canada’s economic performance was described as ambiguous, as the most recent data demonstrated both the expansion of certain sectors and the presence of some worrying trends. Nonetheless, the second quarter was characterized with an annual growth rate of 2.1 percent. The increase may not last to the third quarter as signs of a slow down are coming to the surface. Domestic demand improved slightly recording 2.4% largely fueled by Government spending where 1.7% contributed to the total growth.

Private consumption still remained anemia with collapse in housing investment being a common trend. Partial information available for the months of June and July awaken the fears that there would be limitations in growth in the third quarter. Trends for those months do not suggest that there were major improvements and/or deterioration of GDP on a month by month basis for few months, signifying possible weaknesses come.

The situation in the employment sector remains delicately balanced and investment on manufacturing and acquisition of machinery and equipment are also anticipated to decelerate even more. Given such concerns, Canada’s real gross domestic product growth rate for the third quarter seems to be lower than what is projected by the Bank of Canada (BoC) in July which was at 2.8%.

Declining GDP Per Capita

Of note in the present economic scenario is the fact that the population continues to grow at a faster rate than GDP growth rate. Including fluctuations, real GDP per capita has decreased in the last quarter of the eighth time and Came 3.6% lower than the normal. Over the past decade, Canada has had the lowest economic growth in terms of real GDP per capita among the G-7 countries.

Similarly, in the short run, most experts will agree that the Canadian economy still has more of the same challenges, more significantly the housing and private consumption one. Rising mortgage rates are compounding the pressure. While the political dialogue does not anticipate a full-blown recession, the BoC’s loosening policies could be effective for some categories. To make things a little easier on the domestic labor market, the Canadian export measurements could benefit from the activity in the US economy.

Private consumption registered a slight annualized growth of 0.6% in Q2 2024. Somecategories that are sensitive to interest rates, such as households buying cars and household items, suffered severely. A significant drop in residential housing investment occurred ascompared top the previous quarter at an annualized -7.3%, demonstrating the effects excessive interest rates have on the economy.

On a positive note, those corporate investments for machinery and equipment expenditure also posted quite an impressive outturn. This is, however, likely due to post pandemic seasonal effects that may be reversed in the third quarter further stifling growth.

Export volumes were annualized downwards by 1.8% while import volumes fell in by 0.5%. Stable stock and inventory investment made little contribution to the GDP, and due to high proportion of investment in the utilization of economy there could be constraint on future growth.