Canada’s gross domestic product (GDP) advanced a tepid 0.1% in July, the clearest sign yet
that higher interest rates have started to slow the domestic economy.
July’s 0.1% increase was better than the 0.1% decline that economists had forecast but
represents a sharp slowdown from the first half of the year.
In July, both the manufacturing and construction sectors contracted, while wholesale and retail
trade also declined. The real estate sector slowed across Canada during the month.
Preliminary data from Statistics Canada showed that GDP was unchanged in August, though
that figure will be revised.
Since the start of the second quarter in April, economic growth in Canada has averaged 0.1%
on a monthly basis.
The weakness shows the extent to which Canada’s resource-dependent economy, which had
benefitted earlier in the year from a boom in energy and commodity prices, remains vulnerable
to global challenges and higher interest rates.
The Canadian economy grew 3.1% in this year’s first quarter and 3.3% in Q2. However,
economists now anticipate that Canada’s economic growth will fall to an annualized 1% in both
the third and fourth quarters, according to industry estimates.
