Canadian Economy: GDP Hits 0.6% in January 2024

Key Points:

• GDP growth hits 0.6% in January 2024, marking the fastest growth since January 2023.
• Significant rebound in educational services and continued growth in real estate.
• Bank of Canada holds interest rates with potential rate cuts on the horizon.

In January 2024, the Canadian Economy exhibited its fastest growth rate in a year, expanding by 0.6%. This acceleration underscores a robust economic rebound, significantly outperforming economists’ expectations of a 0.4% growth. Consequently, educational services rebounded after Quebec’s public sector strikes ended, alongside services-producing and goods-producing sectors, significantly driving this surge. The real estate, rental, and leasing sectors grew for the third month, propelled by increased activity in real estate agencies and brokers’ offices.

Canadian Economy Rebound with Steady 5% Policy Rate.

The momentum in economic growth marks a promising start to 2024, especially considering the growth stall witnessed in the latter half of 2023. The Bank of Canada (BoC), maintaining the key policy rate at a 22-year high of 5% since July, signals a cautious approach towards interest rate adjustments. However, the potential for rate cuts could emerge in 2024 if the Economy continues on its projected path, with a gradual easing of rates anticipated to commence in June.

Canadian Economy Surge: Sectors Driving 0.6% Growth

In January 2024, the Canadian Economy grew by 0.6% and revised December 2023’s figures from zero growth to a 0.1% contraction. The educational services sector was pivotal in this growth, particularly due to resolving strikes in Quebec. The services-producing industries and goods-producing sectors recorded growths of 0.7% and 0.2%, respectively. Real estate activities also contributed significantly, marking a sustained growth driven by agents and brokers’ offices.

BoC: Holding Rates with an Eye on Future

Despite the optimistic start in 2024, the BoC has kept the interest rates steady, citing recent inflation figures that came in below expectations. This development indicates that growth may be more due to easing supply constraints rather than a significant increase in demand. The BoC remains vigilant, focusing on inflation trends and their implications for future interest rate decisions. Expected projections, releasing April 10 with the rating announcement, are awaited for insights into BoC’s economic outlook and policy direction.