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Special Report

Canada GDP Research Brief

March 2023

Canadian Economy Stagnates, Supports Bank
of Canada’s Pause in Monetary Tightening

Growth ground to a halt in final quarter of 2022. Canada’s GDP was unchanged in the fourth quarter of last year, which was mainly driven by a fall in the pace of inventory buildup, as well as weak residential and business investment. These declines, however, were offset by positive net trade and a 2.0 per cent annualized increase in household consumption. While no growth was much weaker than the 1.6 per cent annualized consensus, the preliminary estimate for January suggests a 0.3 per cent gain in GDP. If true, this would imply positive first quarter growth, indicating the economy could potentially avoid a recession. Future economic contraction, however, still remains a possibility as the economy absorbs elevated interest rates.

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