Slow economic growth continues to keep Canada’s economy in a fragile state
Anne McLellan and Lisa Raitt
Canada's latest GDP data was released on Friday, and it revealed that the country experienced some growth at the beginning of the year, but at a slower pace than expected.
This most recent data continues to reflect the fragility of the Canadian economy, and the Coalition believes it remains important to maintain a long-term perspective.
This slower growth shown in Statistics Canada’s quarterly national economic accounts comes amid rampant speculation about whether the Bank of Canada will cut interest rates next week. The central bank is scheduled to make its next decision on Wednesday, June 5.
According to StatCan, the first quarter saw an acceleration in growth, with a 0.4 per cent increase (an annualized pace of 1.7 per cent). This marks the strongest pace of growth in a year and is a notable improvement from the stagnation observed in the latter half of last year.
That improvement comes as a result of higher wages for workers, increasing employment and Canada’s growing population, all contributing to relatively strong consumer spending.
Government spending is also playing a role in generating demand, while exports are also performing reasonably well. There are no clear signs of an impending recession. However, the overall economic outlook remains weak.
Despite a modest increase in capital spending last quarter, investment remains sluggish, and businesses are reducing inventory accumulation—a potential indicator of waning confidence. Although higher wages are enabling more spending, households are also saving a larger portion of their income, reflecting a cautious approach.
In reality, Canada's economy has rarely been this fragile outside of a recession. Even with the first-quarter growth acceleration, the economy has only expanded by 0.5 per cent over the past year.
Simply put, our economy is not performing at its full potential. Meeting that potential is the focus of the Coalition’s work and today’s data underscores how much more we need to do to create a sustainable, inclusive economy for all Canadians.
