What's happening to Canada's economy?

During the second quarter of 2022, the Canadian economy was buoyed by strong commodity prices amid the easing of COVID-related restrictions, according to the latest data from Statistics Canada.

Annual growth of Canadian GDP clocked in at 3.3% during the second quarter, building on the strength seen in Q1’s 3.1% growth.

While falling a bit short of economists’ consensus of 4.4% annualized growth and the Bank of Canada’s 4% estimate for Q2, the quarter’s strength was impelled by stronger household and business spending.

However, despite the robustness seen during the first half of the year, signs of slowdown are becoming apparent. On a monthly basis, the economy actually weakened by 0.1% in July, following a meagre 0.1% expansion in June and static readings in May.

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Economists recently polled by Bloomberg are expecting GDP annualized growth to dip below 1.5% during the latter quarters of 2022 and well into next year. Major factors in this cooldown include record-high inflation and mounting interest rates, economists said.

“We continue to expect growth to be slower over the second half of the year with the economy slipping into a ‘moderate’ recession in 2023,” said Nathan Janzen, assistant chief economist at the Royal Bank of Canada.