Canada’s economy grew an annualized 2.1% in this year’s second quarter.
However, on a per capita basis, Statistics Canada reported that the country’s gross domestic product (GDP) decreased 0.1% in the second quarter, marking the fifth consecutive quarterly decline.
The Q2 result comes as Canada’s GDP was essentially unchanged in June of this year, following a 0.1% increase in May. A preliminary estimate from Statistics Canada suggests economic growth was flat in July.
The latest economic data is likely to bolster the Bank of Canada’s confidence in lowering interest rates throughout the remainer of this year and into 2025.
A majority of economists surveyed by Reuters said that they expect Canada’s central bank to
cut its trendsetting overnight interest rate by 25-basis points at each of its three remaining
meetings this year – in September, October and December.
In terms of the Q2 economic expansion, Statistics Canada said that higher government expenditures and business investments were moderated by declines seen in exports, residential construction and household spending.
Government expenditures rose 1.5% and business spending on machinery and equipment increased 6.5% in Q2.
However, growth in household spending slowed to 0.2% in the second quarter after rising 0.9% in the first quarter.
Fewer purchases of motor vehicles and reduced consumer spending hurt overall growth, said the federal statistics agency.
Exports of goods and services from Canada fell 0.4% in Q2 after rising 0.5% in Q1. Lower exports of gold, silver, and platinum, as well as of passenger cars, were partially offset by higher exports of crude oil.
Residential construction across Canada continued to decline in Q2, falling in eight of the last nine quarters as housing investments dropped 1.9%, the largest decline since Q1 2023.
Canada’s economy has been slowing this year as interest rates remain elevated.
The Bank of Canada has already lowered interest rates 50-basis points this year and is widely expected to undertake a further 25-basis point reduction at its Sept. 4 meeting.
