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Special Report

Canada GDP Research Brief

March 2024

Canada’s Economy Performs Better
Than Central Bank Expected

Economy returns to expansionary territory. Canada’s economy grew at an annualized rate of 1.0 per cent in the fourth quarter of 2023, which came after a 0.5 per cent contraction in the third quarter. Over the final three months of last year, the rebound in GDP growth was primarily driven by a 1.0 per cent annualized rise in consumer spending amid record population growth, and a 5.6 per cent surge in exports. However, given historic population gains, per capita GDP declined for the sixth consecutive quarter. GDP growth was also negatively impacted by an annualized fall of more than 5.0 per cent in business investment and a further weakening in residential investment, as heightened interest rates continued to be absorbed by the broader economy. Nevertheless, with borrowing costs widely expected to fall over the second half of the year, a soft landing for Canada’s economy has become increasingly likely despite the central bank hiking its policy rate by 475 basis points over the past two years. 

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