Canada: GDP growth gains steam in the fourth quarter
GDP increased 6.7% in seasonally-adjusted annualized terms (SAAR) in the fourth quarter of 2021, which was up from the 5.5% expansion logged in the third quarter. On an annual basis, GDP rose 3.3% in Q4, decelerating from the previous quarter’s 3.8% increase.
The acceleration in SAAR terms was predominately driven by a rebound in fixed investment, which rose 7.9%, contrasting the 12.4% decline in the third quarter. Less positively, private consumption growth eased to 1.0% in Q4 following Q3’s 20.4% rise, while government consumption growth gained steam rising to 2.2% in the quarter (Q3: +0.1% SAAR).
On the external front, exports of goods and services rose 13.4% in Q4 (Q3: 7.1% SAAR), while imports of goods and services rebounded 14.4% (Q3: -1.6% SAAR). Consequently, the external sector nicked 0..4 percentage points from overall GDP growth, contrasting the 0.6 percentage points contribution in the third quarter.
Meanwhile, a flash estimate released by Statistics Canada showed the economy grew 0.2% on a seasonally-adjusted month-on-month basis in January, which was stronger than December’s flat reading.
Commenting on the outlook, James Orlando, senior economist at TD Economics, noted:
“Canadian economic growth surprised on the upside in the final quarter of last year, growing by 6.7% annualized and providing a strong hand-off into 2022. We expect annual average real GDP growth of 4.0% in 2022, slowing to roughly 3% in 2023. […] The unemployment rate is expected to continue to decline over the coming quarters, with an expected trough of just over 5%.”